EUROPEAN COMMISSION
DIRECTORATE-GENERAL
TAXATION AND CUSTOMS UNION
Indirect Taxation and Tax administration
Value Added Tax
Published 3 April 2014
Explanatory notes
on
the EU VAT changes to the place of supply of
telecommunications, broadcasting and
electronic services that enter into force in 2015
(Council Implementing Regulation (EU) No 1042/2013)
Disclaimer: These explanatory notes are not legally binding and only contain practical
and informal guidance about how EU law should be applied on the basis of the views of
the Commission’s Directorate General for Taxation and Customs Union.
Explanatory Notes – published 3 April 2014
The Explanatory Notes aim at providing a better understanding of the EU VAT
legislation. They were prepared by the Commission services and as indicated in
the disclaimer on the first page they are not legally binding.
These Explanatory Notes are not exhaustive. It means that although they
provide a lot of detailed information there are elements which are not included
in this document.
It is advisable and can be recommended for any user of the Explanatory Notes
interested in a particular topic to read the whole chapter which is dealing with
that specific subject.
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Explanatory Notes – published 3 April 2014

Why explanatory notes?
The objective of these explanatory notes is to provide a better understanding of
legislation adopted at EU level and in this case principally Council Implementing
Regulation (EU) No 1042/2013 of 7 October 2013 amending Implementing Regulation
(EU) No 282/2011 as regards the place of supply of services. Published almost nine
months before the date on which the new rules for the place of supply of
telecommunications, broadcasting and electronic services will start to apply which is
1 January 2015, the explanatory notes are expected to allow Member States and
businesses to better prepare for and adapt to the upcoming changes in time and this in a
more uniform way.

What will you find in the explanatory notes?
The ‘Explanatory Notes’ are intended to be seen as a guidance tool that can be used to
clarify the practical application of the new place-of-supply rules for telecommunications,
broadcasting and electronic services. They provide help in understanding the meaning of
certain issues contained in the articles of Implementing Regulation 1042/2013.

Characteristics of the explanatory notes
The explanatory notes are a collaborative work: although the notes are issued by
Directorate General for Taxation and Customs Union (DG TAXUD) for presentation on
its website they are the result of discussions with both Member States and business.
Member States and business have contributed first by sending their suggestions to the
Commission and then through a Fiscalis workshop held in the Netherlands. Finally,
Member States were consulted on them in the VAT Committee and business during an adhoc meeting. However it should be clear that the Commission services were not bound by
opinions expressed by either Member States or business.
These explanatory notes are not legally binding. The notes are practical and informal
guidance about how EU law is to be applied on the basis of views of DG TAXUD. They
do not represent the views of the Commission nor is the Commission bound by any of the
views expressed therein.
The explanatory notes do not replace VAT Committee guidelines which have their own
role in the legislative process. Furthermore the VAT Committee may in future issue
guidelines in this field.
Over time, it is expected that case law, VAT Committee guidelines and practice will
complement the views given in the notes.
Member States may also prepare their own national guidance for the application of the
new VAT rules on the place of supply of telecommunications, broadcasting and electronic
services.
The notes are not comprehensive: only certain issues have been included for which it
was seen as desirable to provide explanations.
They are a work in progress: these notes are not a final product but reflect the state of
play at a specific point in time in accordance with the knowledge and experience
available.
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Explanatory Notes – published 3 April 2014
TABLE OF CONTENTS
1.
KEY ELEMENTS OF THE EU VAT CHANGES ENTERING INTO
FORCE IN 2015 ........................................................................................................ 10
1.1. General background......................................................................................... 10
1.2. Transactions covered by the 2015 changes ..................................................... 10
1.3. Transactions not covered by the 2015 changes ............................................... 11
1.4. Preparing for the 2015 changes ....................................................................... 11
1.5. Relevant legal acts ........................................................................................... 12
1.6. Glossary ........................................................................................................... 12
2.
TELECOMMUNICATIONS, BROADCASTING AND ELECTRONIC
SERVICES (ARTICLES 6A, 6B, 7 AND ANNEX I) .............................................. 15
2.1. Relevant provisions ......................................................................................... 15
2.2. Why was there a need for clarification? .......................................................... 15
2.3. What do the provisions do? ............................................................................. 16
2.3.1.
Telecommunications services ............................................................ 16
2.3.2.
Broadcasting services ........................................................................ 16
2.3.3.
Electronic services ............................................................................. 17
2.4. Detailed issues arising from these provisions ................................................. 18
2.4.1.
Telecommunications services ............................................................ 18
2.4.1.1.
2.4.2.
2.4.3.
2.4.4.
Could
helpdesk
services
qualify
as
telecommunications services? ........................................... 18
Broadcasting services ........................................................................ 19
2.4.2.1.
When are programmes ‘provided to the general
public’? .............................................................................. 19
2.4.2.2.
When are programmes for ‘simultaneous listening or
viewing’? ........................................................................... 19
2.4.2.3.
What is the distinction between broadcasting
services and programmes on demand? .............................. 19
Electronic services ............................................................................. 20
2.4.3.1.
Could services of price comparison and similar
websites be qualified as electronic services?..................... 20
2.4.3.2.
What is not covered as electronic services: certain
services of a tangible nature booked online ...................... 20
2.4.3.3.
Would the reference to ‘booked online’ cover
bookings made through any device? ................................. 20
All three services in general .............................................................. 20
2.4.4.1.
What if services are bundled with other supplies? ............ 20
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3.
ELECTRONIC AND TELEPHONE SERVICES PROVIDED THROUGH
THE INTERNET, AND SUPPLIED BY AN INTERMEDIARY
(ARTICLE 9A).......................................................................................................... 22
3.1. Relevant provision ........................................................................................... 22
3.2. Background...................................................................................................... 22
3.3. Why was there a need for clarification? .......................................................... 22
3.4. What does the provision do? ........................................................................... 23
3.4.1.
Presumption provided ........................................................................ 23
3.4.2.
Rebuttal of the presumption .............................................................. 24
3.4.3.
Application of presumption – detailed indicators ............................. 27
3.4.4.
When to exclude application of the presumption – processing
of payment ......................................................................................... 32
3.4.5.
Conditions for rebuttal of the presumption ....................................... 32
3.4.6.
When the presumption cannot be rebutted ........................................ 34
3.4.7.
How to proceed where at least one intermediary in the chain
rebuts the presumption? ..................................................................... 35
3.4.8.
How does the presumption apply in respect of telephone
services provided over the Internet? .................................................. 42
3.5. Detailed issues arising from this provision ..................................................... 42
4.
3.5.1.
When does Article 9a apply? – the chart ........................................... 42
3.5.2.
Why is this presumption not placed together with the other
presumptions? .................................................................................... 43
3.5.3.
Why does this presumption not cover broadcasting services? .......... 43
3.5.4.
What are telecommunications networks? .......................................... 44
3.5.5.
What is an interface or a portal? ........................................................ 44
PLACE WHERE A NON-TAXABLE LEGAL PERSON IS ESTABLISHED
(ARTICLE 13A)........................................................................................................ 45
4.1. Relevant provision ........................................................................................... 45
4.2. Background...................................................................................................... 45
4.3. Why was there a need for clarification? .......................................................... 45
4.4. What does the provision do? ........................................................................... 46
5.
STATUS OF CUSTOMER NOT COMMUNICATING HIS VAT
IDENTIFICATION NUMBER (ARTICLE 18) ....................................................... 47
5.1. Relevant provision ........................................................................................... 47
5.2. Background...................................................................................................... 47
5.3. Why was there a need for clarification? .......................................................... 47
5.4. What does the provision do? ........................................................................... 48
5.5. Detailed issues arising from this provision ..................................................... 49
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6.
5.5.1.
Is a supplier compelled to treat a customer without a VAT
identification number as a final consumer? ....................................... 49
5.5.2.
How should a supplier treat a customer established outside the
EU? .................................................................................................... 49
5.5.3.
What was the reason for using ‘may’ instead of ‘shall’ in
Article 18(2)?..................................................................................... 49
5.5.4.
What are the repercussions if the supplier decides not to avail
of the option included in the second subparagraph of
Article 18(2)?..................................................................................... 49
5.5.5.
What would the supplier need to do if the customer later
communicates his VAT identification number to him? .................... 50
5.5.6.
When should the customer communicate his VAT
identification? .................................................................................... 50
5.5.7.
Can a customer who is a taxable person but has been treated as
a non-taxable person by the supplier recover the VAT charged
to him by that supplier? ..................................................................... 50
5.5.8.
What should be done where a customer communicates a VAT
identification number but the supplier has doubts about the
status of the customer or the capacity in which he is acting? ............ 50
5.5.9.
Is there a contradiction between the option provided under the
second subparagraph of Article 18(2) and the requirement
existing in some Member States to include the VAT
identification number on the invoice in order for the supplier to
be able not to charge VAT in respect of cross-border supplies
of services? ........................................................................................ 51
CUSTOMER ESTABLISHED OR RESIDING IN MORE THAN ONE
COUNTRY (ARTICLE 24) ...................................................................................... 52
6.1. Relevant provision ........................................................................................... 52
6.2. Background...................................................................................................... 52
6.3. Why was there a need for clarification? .......................................................... 52
6.4. What does the provision do? ........................................................................... 52
6.5. Detailed issues arising from this provision ..................................................... 53
7.
6.5.1.
How should the presumptions in Articles 24a and 24b be
applied where the customer is established or resides in more
than one country? .............................................................................. 53
6.5.2.
How should Article 24f dealing with evidence, be applied
where the customer is established or resides in more than one
country? ............................................................................................. 53
PRESUMPTIONS FOR LOCATION OF CUSTOMER (ARTICLES 24A
AND 24B) ................................................................................................................. 54
7.1. Relevant provisions ......................................................................................... 54
7.2. Background...................................................................................................... 54
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7.3. Why was there a need for clarification? .......................................................... 54
7.4. What do the provisions do? ............................................................................. 55
7.4.1.
7.4.2.
Presumption applicable for both B2B and B2C supplies .................. 55
7.4.1.1.
Digital supplies at a physical location of the supplier ....... 56
7.4.1.2.
Digital supplies at a physical location of the supplier
on board means of transport .............................................. 57
Presumptions applicable only to B2C supplies ................................. 58
7.4.2.1.
Digital supplies through a fixed land line ......................... 58
7.4.2.2.
Digital supplies via mobile networks ................................ 59
7.4.2.3.
Digital supplies using a decoder ........................................ 59
7.4.2.4.
Other digital supplies ......................................................... 59
7.5. Detailed issues arising from these provisions ................................................. 60
8.
7.5.1.
What is the interaction between the various presumptions? –
the chart ............................................................................................. 60
7.5.2.
What does a wi-fi hot spot mean? ..................................................... 61
7.5.3.
Are prepaid services covered by the presumption for supplies
at a physical location? ....................................................................... 61
7.5.4.
Which presumption prevails if there is a possible clash
between presumptions? ..................................................................... 61
7.5.5.
How should supplies provided via a SIM card be treated where
the mobile country code also covers territories excluded from
the application of EU VAT? .............................................................. 62
7.5.6.
How to understand the reference to a ‘fixed land line’? ................... 63
REBUTTAL OF PRESUMPTIONS (ARTICLE 24D)............................................. 64
8.1. Relevant provision ........................................................................................... 64
8.2. Background...................................................................................................... 64
8.3. Why was there a need for clarification? .......................................................... 64
8.4. What does the provision do? ........................................................................... 64
8.4.1.
Rebuttal by the supplier ..................................................................... 64
8.4.2.
Rebuttal by a tax authority ................................................................ 65
8.5. Detailed issues arising from this provision ..................................................... 66
8.5.1.
Where a presumption applies, is the supplier required to look
for further evidence?.......................................................................... 66
8.5.2.
Can presumptions always be rebutted? ............................................. 66
8.5.3.
Is it possible to rebut the presumption in Article 24a when
supply is made to a taxable person? .................................................. 67
8.5.4.
Can the presumption in Article 24a be rebutted where a
Member State applies the effective use and enjoyment rule in
Article 59a of the VAT Directive? .................................................... 67
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9.
EVIDENCE FOR IDENTIFICATION OF LOCATION OF CUSTOMER
AND REBUTTAL OF PRESUMPTIONS (ARTICLE 24F).................................... 68
9.1. Relevant provisions ......................................................................................... 68
9.2. Background...................................................................................................... 68
9.3. Why was there a need for clarification? .......................................................... 68
9.4. What does the provision do? ........................................................................... 68
9.5. Detailed issues arising from the provision ...................................................... 69
9.5.1.
What is covered by ‘other commercially relevant information’? ...... 69
9.5.2.
What may or may not be considered as a ‘billing address’? ............. 70
9.5.3.
What is the relation between Article 24f (list of evidence) and
Article 24d(1) (rebuttal of a specific presumption by the
supplier)? ........................................................................................... 70
9.5.4.
How much detail does the supplier need when verifying the
evidence? ........................................................................................... 70
9.5.5.
When are two and when are three items of non-contradictory
evidence needed? ............................................................................... 71
9.5.6.
What if the items of evidence are contradictory? .............................. 71
9.5.7.
What if the supplier does not have two items of noncontradictory evidence in the context of Article 24b(d)? .................. 72
9.5.8.
What are the indicators of misuse or abuse by a supplier
mentioned in Article 24d(2)?............................................................. 72
9.5.9.
To what extent may the supplier rely on information provided
by a third party (in particular a payment service provider)? ............. 73
9.5.10. Application of data protection rules in the light of the VAT
changes that will enter into force in 2015 ......................................... 73
10. SUPPLY AT HOTELS AND SIMILAR LOCATIONS (ARTICLE 31C) .............. 74
10.1. Relevant provision ........................................................................................... 74
10.2. Why was there a need for clarification? .......................................................... 74
10.3. What does the provision do? ........................................................................... 74
11. SUPPLY OF TICKETS BY INTERMEDIARY (ARTICLE 33A) .......................... 75
11.1. Relevant provision ........................................................................................... 75
11.2. Background...................................................................................................... 75
11.3. Why was there a need for clarification? .......................................................... 75
11.4. What does the provision do? ........................................................................... 75
11.5. Detailed issues arising from this provision ..................................................... 76
11.5.1. Where should tickets booked online be taxed? ................................. 76
12. TRANSITIONAL MEASURES (ARTICLE 2 OF REGULATION
1042/2013)................................................................................................................. 77
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12.1. Relevant provision ........................................................................................... 77
12.2. Background...................................................................................................... 77
12.3. Why was there a need for clarification? .......................................................... 77
12.4. What does the provision do? ........................................................................... 77
12.5. Detailed issues arising from this provision ..................................................... 78
12.5.1. Payments on account made before the supply takes place ................ 78
12.5.2. What impact does the issue of an invoice have on the place of
supply? ........................................................................................... 79
12.5.3. What level of proof is required in order to show that a
chargeable event has occurred or a payment has been made
before 1 January 2015? ...................................................................... 79
12.5.4. List of examples ................................................................................ 79
13. RELEVANT LEGAL PROVISIONS ....................................................................... 82
13.1. VAT Directive ................................................................................................. 82
13.2. VAT Implementing Regulation ....................................................................... 83
13.3. Implementing Regulation (EU) No 1042/2013 ............................................... 91
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1.
KEY ELEMENTS OF THE EU VAT CHANGES ENTERING INTO FORCE IN 2015
1.1.
General background
From 1 January 2015 all supplies of telecommunications, broadcasting and electronic
services will be taxable at the place where the customer belongs. In order to ensure the
correct taxation of these services, EU and non-EU businesses will need to determine the
status of their customer (a taxable or a non-taxable person) and the place (in which
country of the EU or outside the EU) where that customer belongs.
This modification arises from the changes to the rules on the place of supply of services in
the EU VAT system adopted in 2008 as part of the ‘VAT Package’1.
The underlying reason for these changes was to bring the VAT treatment of these services
in line with one of the main principles of VAT that, as a consumption tax, revenues should
accrue to the Member State in which goods or services are consumed.
For non-EU businesses supplying telecommunications, broadcasting or electronic services
to customers in the European Union, current rules already ensure taxation in the country
where the customer belongs.
Until the end of 2014, business to final consumer (B2C) supplies by EU businesses are
taxed in the country of the supplier. This means that for supplies made to final consumers,
businesses established in Member States applying lower VAT rates have a competitive
advantage over businesses established in other Member States. The new rules of taxation
based on the country where the customer belongs will provide, as from 2015, a level
playing field and should also ensure that the VAT receipts accrue to the Member State of
consumption.
1.2.
Transactions covered by the 2015 changes
The various parts of the VAT Package are entering into force over the period 2010-2015.
The main changes came about in 2010 and included two general rules for the place of
supply of services – Articles 44 and 45 of the VAT Directive. The final part of the VAT
Package, concerning telecommunications, broadcasting and electronic services supplied to
final consumers, will enter into force in 2015.
In accordance with Article 44, services supplied by a business to another business (B2B)
are taxable at the place where the business customer is established. This also covers
telecommunications, broadcasting and electronic services, so there will be no change in
2015 in that respect.
Article 45 provides that services supplied by a business to a final consumer (B2C) are
taxed in the country where the supplier is established. Therefore telecommunications,
broadcasting and electronic services provided by a supplier established in the EU to a nontaxable person who is also established or resides there fall under the general rule and are
taxable in the country where the supplier is established. Articles 58, 59 and 59b (until
31 December 2014) provide that supplies of these services to and from third countries are
taxed in the country where the customer is established or resides.
1
See Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC as regards the
place of supply of services (OJ L 44, 20.2.2008, p. 11).
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As from 1 January 2015, with changes being made to Article 58 B2C supplies of
telecommunications, broadcasting and electronic services will, in all cases, be taxable in
the country of the customer irrespective of where the supplier is established.
If the services supplied are actually consumed outside the European Union, Member
States could decide to avail themselves of the effective use and enjoyment rule provided
for in point (a) of Article 59a and refrain from taxing the supply. Member States can only
apply the effective use and enjoyment rule provided for in point (b) of Article 59a to tax
services actually consumed within their territory if those services are supplied to
customers that belong in a third country. This rule does not apply to services supplied to
customers who belong in a country within the European Union.
1.3.
Transactions not covered by the 2015 changes
The notion of ‘e-commerce’ when commonly used covers various types of economic
activity, including supplies of goods or services carried out over electronic systems such
as the Internet. Not all of those activities are covered by the VAT changes that will enter
into force on 1 January 2015. In particular the following activities are not covered by these
changes: 1) the supply of goods (including distance selling) where use is made of
electronic systems only to place the order, and 2) the supply of services other than
telecommunications, broadcasting and electronic services. These types of transactions are
not included in the arrangements for the mini One Stop Shop (MOSS).
The scope of the 2015 VAT changes is limited and, as explained above, only covers
telecommunications, broadcasting and electronic services. Those changes are relevant
only insofar as the customer is a final consumer.
1.4.
Preparing for the 2015 changes
Soon after the adoption of the VAT Package, the Commission undertook various steps
with a view to agreeing on a more harmonised approach at EU level for these upcoming
changes. For telecommunications, broadcasting and electronic services, the Commission
concentrated on preparing the necessary legal framework in order to ensure a smooth
transition to the new rules of taxation. This work focussed on both the MOSS, the means
by which a supplier can opt to account for the VAT due in Member States where he is not
established, and on the application of the place-of-supply rules themselves.
Concerning the MOSS, a practical Guide has already been prepared by the Commission
services2 and published in the languages of the Community as well as Japanese, Chinese
and Russian. In addition, recommendations on the coordination of audit of the MOSS are
in the process of being produced, with the intention that those recommendations of
relevance to businesses will be published on the TAXUD website.
As regards the place of supply rules, the last legal element in this package of measures
needed to facilitate the implementation of the 2015 changes is Council Implementing
Regulation (EU) No 1042/2013 of 7 October 2013 amending Implementing Regulation
(EU) No 282/2011 (the VAT Implementing Regulation)3.
2
3
Telecommunications, broadcasting & electronic services – European Commission
The provisions concerning services connected with immovable property only apply from 1 January
2017.
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The measures that are being included in the VAT Implementing Regulation only aim at
clarifying how the rules on the place of supply for telecommunications, broadcasting and
electronic services, as laid down by the VAT Directive, should be understood and applied
in practice.
All the other general rules of the VAT Directive (for example on the territorial application
or as regards the chargeable event and the chargeability of VAT) will, as for any other
supply of services or goods, continue to apply but in deciding the correct VAT treatment
of these three services account will need to be taken of the impact that the particular rules
on the place of supply and the MOSS may have.
During the discussions leading up to the adoption of Regulation 1042/2013, it was widely
recognised that more detailed explanatory notes would be useful for businesses and
Member States.
The purpose of these explanatory notes is to present further, more detailed information on
the practical application of the provisions that are being included in the VAT
Implementing Regulation in view of the changes to the place of supply of
telecommunications, broadcasting and electronic services that will enter into force on
1 January 2015.
1.5.
Relevant legal acts
The legal acts referred to in these explanatory notes include:
 Council Directive 2006/112/EC on the common system of value added tax as amended
by Directive 2008/8/EC (hereinafter ‘the VAT Directive’)
 Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down
implementing measures for Directive 2006/112/EC on the common system of value
added tax as amended by Regulation (EU) No 1042/2013 of 7 October 2013
(hereinafter ‘VAT Implementing Regulation’)
 Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 amending
Implementing Regulation (EU) No 282/2011 as regards the place of supply of services
(hereinafter ‘Regulation 1042/2013’)
All relevant legal provisions are cited at the end of the explanatory notes in the wording
applicable as from 1 January 2015. You can find links to these provisions at the beginning
of each chapter.
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned. In all
other instances, it is specified to which legal act reference is made.
1.6.
Glossary
The ‘VAT system’ should be understood as the EU VAT system.
When in the explanatory notes there is a reference to ‘place where the customer belongs’
it should be understood as the place (country) where the customer is established, has his
permanent address or usually resides. That is also sometimes referred to as ‘customer
location’.
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For the purposes of these explanatory notes ‘digital services’ cover telecommunications,
broadcasting and electronic services.
‘Broadcasting services’ shall include services consisting of audio and audio-visual
content, such as radio or television programmes which are provided to the general public
via communications networks by and under the editorial responsibility of a media service
provider, for simultaneous listening or viewing, on the basis of a programme schedule (see
more under point 2.3.2).
‘Electronically supplied services’ (hereinafter ‘electronic services’) shall include
services which are delivered over the Internet or an electronic network and the nature of
which renders their supply essentially automated and involving minimal human
intervention, and impossible to ensure in the absence of information technology (see more
under point 2.3.3).
‘Telecommunications services’ shall mean services relating to the transmission, emission
or reception of signals, words, images and sounds or information of any nature by wire,
radio, optical or other electromagnetic systems, including the related transfer or
assignment of the right to use capacity for such transmission, emission or reception, with
the inclusion of the provision of access to global information networks (see more under
point 2.3.1).
‘Over the top’ services – services which can only be delivered thanks to a connection that
is established via communication networks (i.e. an underlying telecommunications service
is necessary) and therefore do not required the physical presence of the recipient at the
location where the service is supplied.
‘Telecommunications networks’ are networks that can be used to transfer voice and data.
They include but are not necessarily limited to cable networks, telecom networks and ISP
(Internet Service Provider) networks. They should cover any facility which allows access
to telecommunications, broadcasting or electronic services.
For VAT purposes the terms ‘telecommunication networks’ and ‘communication
networks’ are interchangeable. ‘Mobile networks’ (referred to in Article 24b(b)) is a
wholly contained subset of telecommunications networks.
A ‘fixed land line’ should cover elements that connect to a network which allows
transmission and downloads (e.g. broadband, Ethernet) and where there is a requirement
for installation of hardware to send/receive a signal with a degree of permanence (not
designed to be easily or frequently moved). It could cover therefore any type of cable used
to transmit data to or from the premises (for example copper wire, fibre optic cable,
broadband cable) and also a satellite when this requires the installation of a satellite dish at
the premises.
A ‘portal’ is any type of electronic shop, website or similar environment that offers
electronic services directly to the consumer without diverting them to another supplier’s
website, portal etc. to conclude the transaction. Common examples of this include app
stores, electronic marketplaces and websites offering e-services for sale.
An ‘interface’ includes a portal but it is a wider concept. In computing it should be
understand as a device or a program which allows two independent systems or the system
or the end user to communicate.
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A ‘wi-fi hot spot’ should be understood as a reference to a specific location and not to a
vast geographic territory covered by wi-fi.
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2.
TELECOMMUNICATIONS, BROADCASTING
(ARTICLES 6A, 6B, 7 AND ANNEX I)
2.1.
Relevant provisions
AND
ELECTRONIC
SERVICES
The relevant provisions can be found in the VAT Implementing Regulation:
Telecommunications services:

Article 6a
Broadcasting services:

Article 6b
Electronic services:

Article 7

Annex I
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
2.2.
Why was there a need for clarification?
Most B2C supplies are taxable at the place of the supplier. If the supplier is providing
telecommunications, broadcasting or electronic services, from 1 January 2015 the place of
taxation is however in the country where the customer is established or resides.
To draw the line between those services and other services, it was necessary to clarify the
concepts of telecommunications, broadcasting and electronic services. Without such
guidance, it can be difficult for a business to know with certainty whether it will actually
have to charge VAT in the country of its customer.
Current EU VAT legislation already provides elements of clarification but only for
telecommunications and electronic services. It was silent on broadcasting services.
To give as full a picture as possible of the services concerned, new provisions are included
in the VAT Implementing Regulation. With their inclusion, all three types of services are
now defined and in each case, non-exhaustive lists are drawn up with concrete examples
of the services covered and those not covered.
This should provide certainty and consistency for businesses and Member States alike.
Without certainty and consistency there is a risk that differences could arise as to the
scope of application of Article 58 of the VAT Directive. If one and the same service is
regarded as covered by one Member State and not covered by another, this could result in
double taxation or non-taxation. To avoid that, it was necessary to provide for definitions
of the three types of services in question.
With regard to broadcasting and electronic services, these are not fully-fledged definitions
as it is only indicated that these concepts ‘…shall include …’. This offers the flexibility
that is necessary to take account of technological developments, or any new guidelines
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agreed by the VAT Committee or decisions taken by the Court of Justice of the European
Union.
Lists of examples have been drawn up for telecommunications, broadcasting and
electronic services. To provide legal certainty, preference was given to qualifying the
listed services in positive terms. These lists, as pointed out in Recital 3 of Regulation
1042/2013, are not exhaustive, nor are they definitive. This is clearly confirmed by the
wording used ‘… cover, in particular, the following: …’.
Any service captured by one of the definitions given will be covered by Article 58 of the
VAT Directive, and become taxable at the place of the customer, regardless of whether the
service features amongst the examples given. The approach of using open-ended lists was
necessary as not all existing services could be identified and also to take account of new
types of services which may emerge.
2.3.
What do the provisions do?
2.3.1.
Telecommunications services
The concept of telecommunications services is already defined by Article 24(2) of the
VAT Directive. That definition remains unchanged.
To illustrate which services are covered by this definition, a list of examples has been
drawn up. The list which is non-exhaustive, has been derived mainly from examples
discussed and agreed by the VAT Committee. Those examples are now included in
Article 6a(1).
Examples are also given of services which do not qualify as telecommunications services.
That list of examples can be found in Article 6a(2). It is neither exhaustive nor definitive.
2.3.2.
Broadcasting services
Before the adoption of Regulation 1042/2013, EU VAT legislation did not provide any
definition of broadcasting services. Such a definition has now been included in Article 6b
and examples are given of the services that qualify as broadcasting services and those
which do not.
The definition of broadcasting services is, to a large extent, derived from the Audiovisual
Media Services Directive4, as indicated in Recital 2 of Regulation 1042/2013, but it is not
intended to replicate the definition put in place for regulatory purposes. Changes in that
field would therefore not impact the definition in the VAT Implementing Regulation.
A basic principle of EU law is that concepts need to be applied consistently across the
legislation. This means that in EU VAT legislation a concept such as broadcasting
services is relevant not only for determining the place of supply but also with regard to the
rate that could be applied to that supply.
The definition agreed by the Council is relatively narrow and only covers services
consisting of audio and audio-visual content provided by and under the editorial
4
Directive 2010/13/EU of the European Parliament and the Council of 10 March 2010 on the
coordination of certain provisions laid down by law, regulation or administrative action in Member
States concerning the provision of audiovisual media services (Audiovisual Media Services Directive)
(OJ L 95, 15.4.2010, p. 1).
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responsibility of a media service provider (where he has the effective control both over the
selection of the programmes and over their organisation). Editorial responsibility does not
necessarily imply any legal liability under national law for the content or the services
provided to the general public.
In practice this means that a broadcaster who, for example provides premium sports
channels and has the editorial responsibility over them is regarded as supplying
broadcasting services. Such services could be subject to the reduced rate in certain
Member States. However, if the right of access to the same channels is provided by a
supplier who buys the right of access wholesale and then forwards the signals but has no
editorial responsibility over the content provided, then this supplier will be regarded as
supplying electronic services and the standard rate would apply in the Member State of
supply.
The definition covers the distribution of radio and television programmes via electronic
networks such as the Internet but only if they are broadcast for simultaneous listening or
viewing. Where the audio or audio-visual content is not delivered in a synchronic way (at
the same time) to the recipients (the general public) it would normally fall under the
definition of electronic services.
At the same time it seems correct to include within the concept of simultaneous listening
or viewing for the purpose of the broadcasting definition, listening or viewing which is
quasi-simultaneous. Indeed, these services are normally available to the customer without
the need to pay an additional fee for it.
Quasi-simultaneous listening or viewing would cover the following:
(1)
Situations where a time lag occurs between the transmission and the reception of the
broadcast due to technical reasons inherent in the transmission process or as a result
of the connection;
(2)
Situations where the customer is able to record for later listening or viewing, pause,
forward or rewind the signal/programme;
(3)
Situations where the customer is able to programme in advance that the particular
audio or audio-visual content would be recorded at the time when it is broadcast for
simultaneous listening or viewing. The recorded programme can then be listened to
or viewed afterwards by the customer.
In any case quasi-simultaneous listening or viewing should only cover situations where
the customer may influence within certain limits when he can listen to or view a program
but without impacting the transmission of the signal itself.
Quasi-simultaneous listening or viewing should not cover cases where the customer can
demand individually the program that he wants to watch from a list and he is paying a
specific fee for this extra service.
2.3.3.
Electronic services
The concept of electronic services is defined in Article 7 which also includes examples of
services qualifying as electronic services and those that do not. In addition some guidance
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is given by the indicative list of services to be regarded as electronic services that are
included in Annex II of VAT Directive5 which is further developed in Annex I.
The changes introduced to Article 7 and Annex I are made to align it with the definitions
and the lists provided in respect of telecommunications and broadcasting services. In other
words the goal of the changes introduced is to make sure that there are no overlaps or
repetitions in the lists provided in Articles 6a, 6b and 7. Furthermore these modifications
ensured that where possible positive lists (i.e. listing what is a telecommunications,
broadcasting or electronic service) were used in place of negative lists.
That is why videophone services, access to Internet and World Wide Web and telephone
services provided through the Internet have been deleted from the negative list of
electronic services and instead included in the positive list of telecommunications
services.
It also explains the changes made to point (4) of Annex I (including on-demand services
and services not qualifying as broadcasting) which specifies in a more detailed way what
is covered by the electronic services listed in point (4) of Annex II of the VAT Directive
(supply of music, films and games, including games of chance and gambling games, and
of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events).
2.4.
Detailed issues arising from these provisions
2.4.1.
Telecommunications services
2.4.1.1. Could helpdesk services qualify as telecommunications services?
Helpdesk services are listed among the examples of services which would not qualify as
electronic services. They are not included among the examples given of services that
qualify as telecommunications services nor are they listed among the services that would
not qualify as such.
The main feature of helpdesk services is to provide assistance. Such services cannot, in
general, be seen as services relating to the transmission, emission or reception of signals,
words, images or sounds and as such, they would not fall under the definition of
telecommunications services when supplied as ‘stand-alone’ services.
That may however change where the support provided to users only consists in assisting in
case of problems with their telecommunications network, radio or television network or
similar electronic network for which the user is charged separately. The helpdesk service
does not in that case constitute an aim in itself but rather a means of better enjoying the
principal service supplied.
If supplied by the network provider, the service could be qualified as an ancillary service
which shares the tax treatment of the principal service, implying that the helpdesk service
would be treated as a telecommunications service in such circumstances.
Where the customer receives more than one supply, namely, first, access to the network
from a network provider, and, second, helpdesk services from another supplier, the supply
5
Annex II of the VAT Directive was first included with the change brought by Council Directive
2002/38/EC, has not been modified by Directive 2008/8 and remains unchanged in 2015.
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of helpdesk services cannot be regarded as ancillary to the supply of that access (unless
those supplies could be considered indissociable economically)6.
2.4.2.
Broadcasting services
2.4.2.1. When are programmes ‘provided to the general public’?
The transmission or retransmission of radio and television programmes qualifies as
broadcasting services only if the programmes are provided to the general public. If a wider
audience is not targeted, the transmission or retransmission of programmes could not be
seen as broadcasting services.
This condition does not mean that programmes need to be provided to everyone.
Transmission or retransmission can be limited to the general public in one country, or
even a particular region of that country. In situations where access to programmes is
restricted to customers who pay for the services, transmission or retransmission is still
seen as provided to the general public.
2.4.2.2. When are programmes for ‘simultaneous listening or viewing’?
Broadcasting services only include the transmission or retransmission (repetition) of
programmes for simultaneous listening or viewing by the general public to which they are
provided.
Programmes are covered no matter which media is used for their transmission or
retransmission. It is irrelevant whether they are transmitted or retransmitted over
traditional radio or television networks or the Internet or similar electronic networks.
Simultaneous listening or viewing covers also quasi-simultaneous listening or viewing
(see also point 2.3.2).
2.4.2.3. What is the distinction between broadcasting services and programmes on
demand?
The notion of broadcasting services as defined by Article 6b(1) covers several elements
including the requirement that to be regarded as such the services have to be broadcast for
simultaneous listening or viewing.
With programmes supplied on demand, an individual customer is provided, against
payment, access to specific programmes at the time he wants to: in such case,
simultaneous listening or viewing of the programme does not take place. Therefore
programmes supplied on demand cannot be seen as broadcasting services but have to be
qualified as electronic services.
These programmes supplied on demand have to be distinguished from ‘pay per view’. In
the latter case, the program is normally transmitted or retransmitted by the supplier and the
customer decides whether or not to see it by paying or not the fee. Therefore, if in the ‘pay
per view’ system there is simultaneous listening or viewing then it will qualify as
broadcasting services.
6
See, in particular, judgment of the CJEU in case C-366/12 Klinikum Dortmund.
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2.4.3.
Electronic services
2.4.3.1. Could services of price comparison and similar websites be qualified as
electronic services?
The nature of services consisting of price comparison (and services offered by similar
webpages) should be assessed against the definition included in Article 7(1). They are
provided over the Internet and normally their supply is automated without human
intervention. Therefore, usually, these services should be qualified as electronic services.
Of course the reply to the question whether price comparison services provided by such
websites to final consumers will actually be taxable as such depends on whether they are
supplied for a consideration. Where these are provided to the consumer for free, that
particular supply will fall outside the scope of VAT.
2.4.3.2. What is not covered as electronic services: certain services of a tangible nature
booked online
The notion of ‘electronically supplied services’ does not, according to Article 7(3)(t) and
(u), cover admission to certain events and other services of a tangible nature booked
online. Those include cultural, artistic, sporting, scientific, educational, entertainment or
similar events as well as accommodation, car-hire, restaurant services, passenger transport
and similar services.
Point (t) of Article 7(3) refers to events similar to cultural, artistic, sporting, scientific,
educational and entertainment ones. The reference to ‘similar events’ reflects what is the
scope of Articles 53 and 54 of the VAT Directive and should be read in that context. It
would certainly cover the events listed in Article 32(2) which are shows, theatrical
performances, circus performances, fairs, amusement parks, concerts, exhibitions and
other similar cultural events (point (a)), sporting events such as sport matches or
competitions (point (b)) and educational and scientific events such as conferences and
seminars (point (c)).
Point (u) of Article 7(3) includes services similar to accommodation, car-hire, restaurant
services and passenger transport. To be regarded as similar, these would need to be
services principally and habitually carried out as part of the activities undertaken by any of
the sectors concerned. It would therefore certainly include, for example, a service
consisting in the hiring of boats.
2.4.3.3. Would the reference to ‘booked online’ cover bookings made through any
device?
Online booking could be made by a person using any device which allows for booking
over the Internet or any other electronic network. That includes devices such as
computers, smart phones, tablets, smart watches and smart glasses.
2.4.4.
All three services in general
2.4.4.1. What if services are bundled with other supplies?
Each of the services (telecommunications, broadcasting or electronic) can be bundled with
other goods or services.
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Bundling the services themselves, like for example with Triple Play (where internet,
television and telephone are provided in a package for example over a single broadband
connection or via a satellite) causes no particular problems with regard to the place of
supply.
Where a bundle includes goods or other services not covered by the 2015 changes, it is
necessary to determine whether the bundle is a single supply and if so, how to qualify the
supply.
A supply can consist of one or more elements. If there are more elements, a transaction
comprising a single supply from an economic point of view should not be artificially split.
The essential features of the supply must be ascertained in order to determine whether the
customer, being a typical consumer, receives several distinct principal supplies or a single
supply.
The decision will very much depend on facts and therefore has to be taken on a case-bycase basis taking into consideration relevant case law of the Court of Justice of the
European Union7.
7
See for example judgment of the CJEU in case C-349/96 Card Protection Plan Ltd.
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3.
ELECTRONIC
AND TELEPHONE SERVICES PROVIDED THROUGH THE INTERNET,
AND SUPPLIED BY AN INTERMEDIARY (ARTICLE 9A)
3.1.
Relevant provision
The relevant provision can be found in the VAT Implementing Regulation:
 Article 9a
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
3.2.
Background
Where telecommunications and electronic services are supplied to a final consumer
(B2C), it is the supplier of the services who is liable to pay the VAT to the tax authorities.
It is therefore essential to identify with certainty who is the supplier of the services
provided, in particular when these are not supplied directly to the final customer but via
intermediaries.
3.3.
Why was there a need for clarification?
A whole range of digital services supplied through a telecommunications network, via an
interface or a portal, can be delivered to the final consumer by an intermediary. As well as
accessing and downloading music or games on to mobile phones, the services can include
for instance directory enquiries, weather forecasts, competitions, voting and all kinds of
apps. Sometimes these services are available through the use of premium rate services, for
example via the short message service (SMS), a texting facility on the mobile phone for
which higher prices than normal are charged. The surcharge serves as payment for the
digital service. In other instances a customer will have an account at an app store, platform
or other similar place and will pay for the services through a credit card or some other
payment method.
The number of parties involved in the distribution of these services can vary. In some
instances, the service may be supplied directly by the owner of the electronic content to
the ultimate consumer. That is for example the case where an individual purchases a song
directly from an independent artist via his or her website. Other situations however
involve transactions between multiple intermediaries. For example, in the case of a ring
tone, the content owner may enter into a licensing agreement with an aggregator of ring
tones that enters into agreements with mobile telecommunications providers that sell the
ringtones to their mobile customers. Similar arrangements exist when creators of apps
contract with app stores or platforms and where customers purchase those downloaded
apps by paying to the store or the platform via which the app was bought.
Supply chains are often long and can stretch across borders. Where that is the case, it can
be difficult to know when the services are finally supplied to a final consumer, and who is
responsible for the VAT on that supply. To provide legal certainty for all parties involved
and to ensure collection of the tax, it was necessary to define who in the chain must be
seen as the supplier of the service to the final consumer.
The chart below illustrates some typical situations where Article 9a can help to clarify
who the supplier of the service to the final consumer would be.
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Content
owner
Content
owner
Content
owner
Content
owner
Aggregator
Content
owner
Portal
Content
owner
App
Store
Consumer
Content
owner
The arrows show how the content is being delivered to the final consumer. The chart does
not include the aspects of payment processing.
3.4.
What does the provision do?
3.4.1.
Presumption provided
The first subparagraph of Article 9a(1) introduces the rebuttable presumption that a
taxable person who takes part in the supply of electronic or internet telephone services is
acting in his own name but on behalf of the provider of these services. This provision
reflects the legal situation laid down in Article 28 of the VAT Directive when the
following three requirements are fulfilled: (i) participation of a taxable person in the
supply of service, (ii) acting in his own name, (iii) but on behalf of another person.
This presumption means that for each transaction in the supply chain between an
electronic service provider and the end consumer, each intermediary (such as a content
aggregator or a telecom operator, etc.) is deemed (seen) to have received and supplied
further the electronic (or internet telephone) service himself. To illustrate with an example,
a business making apps available via a web site would be deemed to be the one selling
those apps to the final customer and therefore responsible for the VAT8 and not the
business that owns the app (content owner).
There are some exceptions to this presumption – those are explained later in this chapter.
8
See in particular scenarios 7-10 on pages 36 to 42.
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The chart below shows the situation where all the intermediaries are caught by the
presumption. Intermediary B is deemed (seen) to receive the service and supply it further
to intermediary C as if he was the service provider. Intermediary C is deemed (seen) to
receive the service from B and supply it further to the final consumer as if he was the
service provider.
Scenario 1:
A
(electronic or internet
telephone service
provider)
content
invoice
B
(intermediary)
content
invoice
C
(intermediary)
content
bill or
receipt
F
(consumer)
3.4.2.
Rebuttal of the presumption
Article 9a also provides that this presumption may be rebutted by an intermediary under
certain conditions. It means that if an intermediary rebuts the presumption he is no longer
deemed (seen) as receiving and further supplying the service. The conditions for rebuttal
to take place are listed at the end of the first subparagraph of Article 9a(1) and are further
developed in the second and third subparagraphs of the same provision.
The provision is constructed in such a way that the presumption will apply unless it is
rebutted by a taxable person taking part in the supply meeting all of the following
conditions:
(1)
the provider of the service is explicitly indicated as the supplier by this taxable
person which means that:
(a)
the invoice issued or made available by each taxable person taking part in the
supply identifies (i.e. there is a sufficiently clear indication) the service in
question and its supplier (in normal commercial transactions a VAT invoice is
issued between two taxable persons); and
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(b)
the customer’s bill or receipt identifies the service in question and its supplier
(the taxable person must issue or make available a bill or receipt to the final
customer stating what has been supplied and providing details of the supplier
e.g. business name, VAT identification number); and
(c)
the taxable person taking part in the supply does not authorise the charge to
the customer (it means for instance that the app store is not responsible for the
payment between the final consumer and the content owner of the app); and
(d)
the taxable person taking part in the supply does not authorise delivery (it
means that the delivery for instance of the app from the content owner via the
app store is not authorised by the app store); and
(e)
the taxable person taking part in the supply does not set the general terms and
conditions of the supply (it means by way of example that the terms of the sale
of an app via an app store are not set by the app store);
AND
(2)
this is reflected in the contractual arrangements (all points from 1(a) to (e) must be
reflected in the contractual arrangements for instance between the app store and the
app content owner. If this is not the case the rebuttal of the presumption cannot take
place.).
If those conditions are met for each intermediary in the chain, the presumption in
Article 9a is rebutted and the electronic service provider will remain the supplier of the
services provided to the end consumer (notwithstanding the transactions by the
intermediaries in the supply chain): this implies that this service provider is the one
responsible for determining the place of supply and for the VAT on the service supplied to
the end consumer.
The chart below shows the situation where all the intermediaries rebutted the presumption.
In such a situation for example the content owner of an app is known by all parties as the
one selling the app to the final consumer. This is indicated on the invoices and on the bill
or receipt issued and it is also included in the contractual arrangements.
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Scenario 2
A
(electronic or
internet telephone
service provider)
invoice for the
intermediation
content
B
(intermediary)
content
bill/receipt
for the service supplied
invoice for the
intermediation
C
(intermediary)
content
F
(consumer)
In a case where an intermediary in the supply chain authorises payment or delivery or sets
the terms and conditions of the supply to the consumer, that intermediary cannot rebut the
presumption in Article 9a and will be treated as making the supply to the final consumer
for VAT purposes.
If, at any stage, in a supply chain involving several intermediaries an intermediary cannot
or did not rebut the presumption it is not possible for intermediaries further down the
chain to indicate the (original) service provider as the supplier of the services. In that case,
it will only be possible for them to go back up to the (first) intermediary caught by the
presumption (see also point 3.4.7).
On the other hand a taxable person who only provides for processing of payments for
services (e.g. a credit card company) cannot, on account of having processed the payment,
be regarded as taking part in the supply of services. Accordingly, the presumption does
not apply to such a taxable person and consequently that person cannot be taken to make
the supply to the final customer unless in any other way he takes part in the supply of the
service.
In the below chart all the intermediaries taking part in the supply are covered by the
presumption (the aggregator and the portal receive and further supply the service).
Businesses providing payment services are not taking part in the supply and therefore they
cannot be caught by the presumption.
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Scenario 3
Content owner
(electronic service
provider)
invoice
content
Aggregator
(intermediary)
invoice
content
Portal
invoice for
the payment services
(intermediary)
Payment
Aggregator
(not in the chain)
bill/receipt
content
for the service supplied
invoice for
the payment services
cash
Payment
Service
Provider
(not in the chain)
Consumer
3.4.3.
Application of presumption – detailed indicators
The presumption in Article 9a applies when a taxable person is taking part in the supply
(and therefore is deemed (seen) to act in his own name but on behalf of the provider of the
service).
In order for a taxpayer or a tax authority to assess whether a taxable person is taking part
in the supply of services provided through a telecommunications network, an interface or
a portal, the facts have to be assessed and the nature of the contractual relations examined.
If there is a contradiction between contractual arrangements and economic reality then the
latter prevails.
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The reference to ‘taking part in the supply’ in Article 9a should not be given a different
meaning than that covered by Article 28 of the VAT Directive where reference is made to
‘a taxable person [who] takes part in the supply of services’. At all times the interpretation
of Article 28 of the VAT Directive should be based on EU law and not on national laws.
Normally a taxable person is taking part in the supply if contractual or legal arrangements
clearly stipulate that this taxable person is acting in his own name but on behalf of the
provider of those services and this reflects the reality (the factual features of the supply).
However it is also possible that contractual or legal arrangements are not sufficiently welldefined in that regard. In such a situation the initial assessment of the supply in question
already requires an analysis of all the features of the transaction.
To sum up, both facts and legal relations need to be taken into account in assessing
whether a taxable person takes part in the supply. For that reason a clause in a contract
(whether signed before or after 1 January 2015) excluding a taxable person from a chain
of transactions (as not taking part in the supply) is not sufficient if that is not reflected in
the economic reality.
Concerning specific indicators, there is no doubt that a taxable person authorising the
charge to the customer and/or the delivery of the service, and/or setting the general terms
and conditions of the supply, takes part in that supply. More details on that issue are
included under point 3.4.6.
Furthermore, various other elements can be indicative of a taxable person taking part in a
supply who may then, as a result of the rule included in the first subparagraph of
Article 9a(1), be captured by the presumption. However before arriving at a final
conclusion in that respect all the features of the supply need to be taken into account.
Some indicators suggesting that a taxable person takes part in the supply are listed below:
– Owning or managing the technical platform over which the services are delivered;
– Being responsible for the actual delivery;
– Being responsible for collecting payment unless the only involvement of the taxable
person is the processing of payment;
– Controlling or exerting influence over the pricing;
– Being the one legally required to issue a VAT invoice, receipt or bill to the end user in
respect of the supply;
– Providing customer care or support in relation to queries about or problems with the
service itself;
– Exerting control or influence over the presentation and format of the virtual market
place (such as app stores or websites) such that the brand and identity of the taxable
person are significantly more prominent than those of other persons involved in the
supply;
– Having legal obligations or liabilities in relation to the service provided;
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– Owning the customer data related to the supply in question;
– Being in a position to credit a sale without the supplier’s permission or prior approval
in cases where the supply was not properly received.
Not all taxable persons involved in the supply of electronic or internet telephone services
can be seen as taking part in the supply as envisaged by Article 9a. Below five different
situations are identified in that respect. The first three deal with cases where an
intermediary is not seen as taking part in the supply in the sense of Article 9a. The last two
cases (fourth and fifth) refer to situations where an intermediary is taking part in the
supply as referred to in Article 9a.
1) As illustrated in Scenario 3 a provider of payment services (e.g. a credit card company)
is not seen as taking part in the supply of the services to the final customer if that provider
only processes the payment (see point 3.4.4).
2) The internet provider is not taking part in the supply when he is only making the
internet network available for carrying of the content and/or collection of payment (via wifi, cable, satellite, other). In this situation his participation is not sufficient to be
considered as taking part in the supply.
3) In cases where a mobile operator only performs the functions of carrying the content
and/or processing payment (in the same way that an internet provider makes the internet
network made available) as described above, that mobile operator should be treated in the
same way and not be seen as taking part in the supply.
The chart below illustrates the situation where an internet provider or a mobile operator
facilitates the flow of cash and/or content.
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Scenario 4
Content owner
(electronic service
provider)
invoice
content
Aggregator
(intermediary)
invoice
content
App Store/
Portal
cash and/or
content flow
(intermediary)
invoice for the
intermediation
Internet Provider
(facilitating delivery of content and/or
collection of payment)
(not in the chain)
bill/receipt
for the service supplied
Consumer
cash and/or
content flow
4) If a mobile operator is involved in any way other than that described above (carrying of
the content or processing of payment) his participation cannot be disregarded. In other
words his involvement in the supply would then become sufficiently predominant and
therefore he should be seen as taking part in the supply in the sense of Article 9a. One of
the tests which should help to identify whether a mobile operator takes part in the supply
is to verify whether the network is essential for the supply. Another possible point is to
verify whether the payment collection covers only a simple charge to a bill.
5) There is no doubt that where an app store or a portal puts up an electronic service for
sale it must be seen as predominantly involved in the supply of that service and it should
therefore be regarded as taking part in the supply in the sense of Article 9a. The fact that
there is an additional intermediary taking part in that supply who is placed between the
app store or portal and the final customer (e.g. a mobile operator), does not automatically
change the situation of the app store or portal.
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The chart below illustrates the situation where a mobile operator, an app store or a portal
is taking part in the supply and therefore is caught by the presumption.
Scenario 5
Content owner
(electronic service
provider)
content
invoice
Aggregator
(intermediary)
content
invoice
App Store/
Portal
(intermediary)
content
invoice
Mobile
Operator*
(intermediary)
content
bill/receipt
for the service supplied
Consumer
* Mobile operator acts as more than a payment service provider or an internet provider
Taking part or not in the supply? Additional illustrations
The following three situations illustrate further the issue of who is and who is not taking
part in the supply:
Situation 1
Where,
(1)
a customer of an app store company purchases an electronic service (a subscription
for an e-magazine, a game, in-game credits) from a content owner;
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(2)
the contract for the supply of the electronic service is made directly between the
content owner and the customer;
(3)
the charge is collected directly by the app store but the electronic service is delivered
(i.e. technical carrying of the data) to the customer’s phone through the network of
the mobile operator;
then the mobile operator should not be seen as taking part in the supply.
Situation 2
Where in comparison to situation 1, circumstances differ as compared to point (3) and the
charge would be also collected by the mobile operator, the mobile operator should still not
be seen as taking part in the supply.
Situation 3
However, where the collection of payment by the mobile operator would be done through
more than only a simple charge to a bill (as is the case in situation 2) and it would include
other elements, then the mobile operator has to be seen as taking part in the supply.
Additional elements may cover the use of a premium SMS when used not only for
processing of payment.
Nevertheless it has to be kept in mind that the market of electronic and
telecommunications services is developing quickly, and it is therefore neither possible nor
advisable to cover all possible practical situations in these Explanatory Notes. It should in
any event be clear that the assessment in each case needs to include the aforementioned
elements.
3.4.4.
When to exclude application of the presumption – processing of payment
Paragraph 3 of Article 9a excludes taxable persons who solely provide the processing of
payments and who are not seen as taking part in the supply (in the main chain of
transactions). This would for example cover payment by a credit card company.
For the assessment of whether a taxable person is only providing processing of payments,
the economic reality and the contractual arrangements (insofar as these are not
contradicted by facts) are decisive.
In addition to providing a method of payment the taxable person may undertake other
activities directly related to this processing of payments – but not linked with the main
supply. That could for example be accepting bad debt risk or providing first line customer
care which in essence would mean redirecting to the supplier except for situations linked
with the payment processing as such. These activities would not be sufficient to consider
that taxable person as having taken part in the supply.
3.4.5.
Conditions for rebuttal of the presumption
An electronic or internet telephone service provider is regarded as explicitly indicated
where it can be clearly demonstrated, both in terms of the contractual arrangements and of
the information provided by each taxable person taking part in the supply and finally
communicated to the final customer, that he is the person from whom the service is being
supplied.
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Both conditions mentioned in the second subparagraph of Article 9a(1) have to be
met simultanously in order to be able to explicitly indicate the service provider e.g. the
app content owner as the supplier of the services. Throughout the supply chain, the first
condition (point (a) – issue of a VAT invoice) applies to the B2B transactions whilst the
second condition (point (b) – issue of a bill or receipt, although this can include a VAT
invoice when a B2C invoice is required) deals with the final B2C transaction in the chain.
For the service provider (of electronic services or telephone services provided over the
internet) to be explicitly indicated, he must be identified in a sufficiently clear way as
being the supplier on the VAT invoice issued or made available by each taxable person
taking part in the supply, and on the bill or receipt which is issued or made available
(where there is no obligation to issue a VAT invoice) to the final customer. Where this
information has not been provided by each taxable person taking part in the supply and
communicated (by issuing or making avaiable a bill or receipt or VAT invoice) to the final
customer, the service provider e.g. app content owner cannot be regarded as being
explicitly indicated as the supplier.
At the same time, even if a taxable person meets all the conditions to rebut the
presumption in Article 9a, it does not mean that he could not be seen as taking part in the
supply (in accordance with Article 28 of VAT Directive).
When identifying the supplier as well as the service, reference can be made either in full
or by using a specific and unique reference, code or similar identifier provided that the
reference used is clear enough for all parties concerned. The description of the supplier
should be sufficiently unambiguous to identify that supplier to any of the customers but it
should not be necessary to include full details such as full legal name, address or VAT
identification number of the supplier. No specific identification method should be
prescribed or privileged as otherwise it would introduce additional constraints for
businesses applying different commercial practices.
Concerning the B2B invoice, this should comply with the normal VAT rules9.
When reference is made to a ‘bill or receipt’ issued or made available to the customer, that
concerns, as explained above, B2C transactions. This should be seen as a minimum
condition which is necessary together with the other elements taken from Article 9a, to
allow the taxable person to explicitly indicate the service provider as the supplier. It in no
way changes the rules on invoicing included in the VAT Directive and their application at
national level. In particular this condition neither imposes an obligation to issue invoices
for supplies to final consumers in Member States where this is not required nor does it
exclude an obligation to do so in Member States where invoicing is compulsory also for
B2C supplies. In cases where a B2C invoice is required then the details mentioned in
Article 226 of the VAT Directive must be provided which includes more information than
on the bill or receipt10.
9
10
According to the Explanatory notes on invoicing, document reference: A-2, Topic: Definition of an einvoice, ‘an invoice should be regarded as issued when the supplier or a third party acting on behalf of
the supplier, or the customer for self-billed invoices, makes the invoice available so that it can be
received by the customer. This may mean the electronic invoice is transmitted directly to the customer
through for instance email or a secure link, or indirectly through for instance one or several service
providers, or that it is made available and accessible to the customer through a web portal or any other
method’.
Information regarding Member States’ rules on invoicing will also be made available on the
Commission’s website.
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3.4.6.
When the presumption cannot be rebutted
A taxable person who is either authorising the charge to the customer, authorising the
delivery of the service or setting the general terms and conditions, will always be
presumed to act in his own name, but on behalf of another taxable person. It is sufficient
that only one of these three conditions is met to exclude that taxable person from
explicitly indicating another taxable person as the supplier of the service to the final
consumer.
It is enough that, in the chain, one taxable person meets one of the three conditions to
prevent the rest of the chain from indicating the original service provider as the supplier to
the final consumer. Thus for example if a phone network meets one of the three conditions
in setting the payment, delivery or contract terms the app content owner cannot be the one
making the supply to the final customer.
Therefore when several parties in the supply chain authorise the charge and/or delivery
and/or set the general terms and conditions of the supply none of them may explicitly
indicate the original service provider as the supplier of the service to the final consumer.
The correct identification of all the intermediaries in the supply chain should take into
account the contractual relations between the parties. Further the perception by the final
consumer as to who is supplying the service to him cannot be disregarded (see also
point 3.4.7 where you will find further clarification).
Authorisation of the charge to the customer
The phrase ‘authorises the charge to the customer’ is not the same as taking payment or
collecting payment. It refers to the situation where the taxable person can influence
whether, at what time, or under which preconditions the customer pays. A taxable person
authorises payment when he decides that the customer’s account, credit or bank card, or
similar, can be debited/charged as payment for the service. In practice, the person who
authorises payment is likely to be the person who controls the technical platform (e.g. app
store, portal) over which the services are offered or provided.
Authorisation of the delivery of the services
The phrase ‘authorises … the delivery of the services’ is a broader concept than making
the delivery. It refers to the situation where the taxable person can influence whether, at
what time, or under which preconditions the delivery is made. A taxable person authorises
the delivery when he either sends approval to commence the delivery of the service,
delivers the service himself or instructs a third party to make the delivery. In practice, the
person who authorises delivery is likely to be the person who controls the technical
platform (e.g. app store, portal) over which the services are provided.
Setting the general terms and conditions of the supply
In the context of application of Article 9a the phrase ‘the general terms and conditions of
the supply’ covers any general terms and conditions that are set by a taxable person taking
part in the supply and with which a final customer has to agree before purchasing the
service. For example it includes the terms and conditions set by market places and similar
platforms requiring users to agree to general terms and conditions for using that website or
platform (that could be to maintain an account) as well as the general terms and conditions
(including license agreement) which the final customer has to agree to before receiving
any access to a app or content.
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As for the meaning of ‘setting’ the general terms and conditions of the supply it covers the
situation where a taxable person takes the decision on the general terms and specific
conditions (e.g. rights and obligations such as price, payment terms, delivery conditions,
warranty rules, etc.) and can impose them on other participants (by formally accepting
them).
3.4.7.
How to proceed where at least one intermediary in the chain rebuts the
presumption?
Normally an intermediary who takes part in the supply is covered by the presumption
from Article 9a. Nevertheless it can be rebutted where all the required conditions are met.
Any intermediary in the supply chain who does not meet the conditions to rebut the
presumption in Article 9a is caught by it and will be deemed to have received and supplied
the service himself to the next intermediary in the chain or to the final consumer. That will
see him being treated as the service provider.
In order to correctly analyse the situation of each of the intermediary, the assessment of
this chain supply of a service should start at the final consumer’s level and move
upstream in the chain as indicated in the chart below (scenario 6). This approach is
closely linked with the purpose of Article 9a which is to tax as close as possible to the
final consumer unless there is a sufficient level of information allowing to identify the
taxable person supplying to the final consumer at an earlier point in the chain.
The chart below illustrates the correct order when assessing the transactions in the chain
for the application of Article 9a.
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Scenario 6
A
(electronic or internet
telephone service
provider)
assessment
Article 9a
content
B
(intermediary)
content
assessment
Article 9a
C
(intermediary)
content
assessment
Article 9a
D
(intermediary)
content
assessment
Article 9a
F
(consumer)
The four charts below (scenarios 7-10) present some general scenarios for the application
of the presumption from Article 9a, where at least one intermediary in the chain rebuts the
presumption.
Scenarios 7 to 10 deal with the most basic types of situations possible under Article 9a.
The purpose of these charts is to provide additional guidance in the most common
generic settings. Real life situations would often differ in details from what is presented
in the charts. It is important to keep that in mind each time that the information included in
any of the charts in these Explanatory Notes is applied to concrete real life situations.
As one should always start at the level of the final consumer and move up in the chain in
order to correctly assess the transactions, the simplest situation where a rebuttal can take
place will be the following:
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Scenario 7
A
(electronic or internet
telephone service
provider)
content
invoice for the
intermediation
B
(intermediary)
bill or receipt for the
service supplied
content
F
(consumer)
Comments to scenario 7:
Intermediary B rebuts the presumption.
B can do so because he fulfilled the required conditions: in the invoice issued by B to A
there is a sufficiently clear reference to the main service and the service supplier (the
requirement from point (a) of the second subparagraph of Article 9a(1) is met); in the bill
or receipt issued by A to the consumer F the service and the service supplier are identified
(the requirement from point (b) of the second subparagraph of Article 9a(1) is met);
contractual arrangements confirm that B is supplying only some intermediation services
and that the main service is provided by A.
At the same time B is not excluded from the possibility to rebut the presumption because
he is not authorising the charge to the customer nor he is authorising the delivery of the
service nor he is setting the general terms and conditions.
A (the content owner/developer/initial service provider) is in this case seen as a provider
supplying the service to the final consumer. He issues the bill or receipt to final consumer
F. A will normally be responsible for the VAT in respect of the supply of the service to the
final consumer.
Scenarios 8 and 9 below show some more complex situations.
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Scenario 8
A
(electronic or internet
telephone service
provider)
invoice
content
B
(intermediary)
content
invoice for the
intermediation
C
(intermediary)
bill or receipt for the
Service supplied
content
F
(consumer)
Comments to scenario 8:
Intermediary C rebuts the presumption.
C can do so because he fulfilled the required conditions: in the invoice issued by C to B,
there is a sufficiently clear reference to the main service and the service supplier (the
requirement from point (a) of the second subparagraph of Article 9a(1) is met); in the bill
or receipt issued by B to the consumer F the service and the service supplier are identified
(the requirement from point (b) of the second subparagraph of Article 9a(1) is met);
contractual arrangements confirm that C is supplying only some intermediation services
and that the main service is provided by B.
At the same time C is not excluded from the possibility to rebut the presumption because
he is not authorising the charge to the customer nor he is authorising the delivery of the
service nor he is setting the general terms and conditions.
Intermediary B cannot (does not fulfil the conditions) or does not want to rebut the
presumption i.e. he is deemed to receive the service from A and to supply it further to final
consumer F (by which he is seen as a service provider). B will normally be responsible for
the VAT in respect of the supply of the service to the final consumer.
A (the content owner/developer/initial service provider) supplies the service to B and
issues a normal B2B invoice. He does not have a direct contact with the final consumer.
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Scenario 9
A
(electronic or internet
telephone service
provider)
content
invoice for the
intermediation
B
(intermediary)
content
invoice for the
intermediation
C
(intermediary)
bill or receipt for the
Service supplied
content
F
(consumer)
Comments to scenario 9:
Intermediary C rebuts the presumption.
C can do this because he fulfilled the required conditions: in the invoice issued by C to B
there is a sufficiently clear reference to the main service and the service supplier (the
requirement from point (a) of the second subparagraph of Article 9a(1) is met); in the bill
or receipt issued by A to consumer F the service and the service supplier are identified
(the requirement from point (b) of the second subparagraph of Article 9a(1) is met);
contractual arrangements confirm that C is supplying only some intermediation services
and that the responsibility for the main service to provide moves to B.
At the same time C is not excluded from the possibility to rebut the presumption because
he is not authorising the charge to the customer nor he is authorising the delivery of the
service nor he is setting the general terms and conditions.
Intermediary B also rebuts the presumption. B can do so because he fulfilled the required
conditions: in the invoice issued by B to A there is a sufficiently clear reference to the
main service and the service supplier (the requirement from point (a) of the second
subparagraph of Article 9a(1) is met); in the bill or receipt issued by A to consumer F the
service and the service supplier are identified (the requirement from point (b) of the
second subparagraph of Article 9a(1) is met); contractual arrangements confirm that B is
supplying only some intermediation services and that the responsibility for the main
service to provide moves to A.
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At the same time B is not excluded from the possibility to rebut the presumption because
he is not authorising the charge to the customer nor is he authorising the delivery of the
service nor is he setting the general terms and conditions.
A (the content owner/developer/initial service provider) is in this case seen as a provider
supplying the service to the final consumer. He issues the bill or receipt to final consumer
F. A will normally be responsible for the VAT in respect of the supply of the service to the
final consumer.
In the last scenario 10 a more complex situation – in comparison to scenario 8 – is
presented, where not all the intermediaries rebutted the presumption from Article 9a.
Scenario 10
A
(electronic or internet
telephone service
provider)
content
invoice for the
intermediation
B
(intermediary)
content
invoice for the
intermediation
C
(intermediary)
invoice
content
D
(intermediary)
content
E
(intermediary)
bill or receipt for the
service supplied
content
F
(consumer)
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Comments to scenario 10:
Intermediary E rebuts the presumption.
E can do so because he fulfilled the required conditions: in the invoice issued by E to D,
there is a sufficiently clear reference to the main service and the service supplier (the
requirement from point (a) of the second subparagraph of Article 9a(1) is met); in the bill
or receipt issued by D to consumer F the service and the service supplier are identified
(the requirement from point (b) of the second subparagraph of Article 9a(1) is met);
contractual arrangements confirm that E is supplying only some intermediation services
and that the main service is provided by D.
At the same time E is not excluded from the possibility to rebut the presumption because
he is not authorising the charge to the customer nor is he authorising the delivery of the
service nor is he setting the general terms and conditions.
Intermediary D cannot (does not fulfil the conditions) or does not want to rebut the
presumption i.e. he is deemed to receive the service from A (in our scenario) and to supply
it further to final consumer F (by which he is seen as a service provider). D will normally
be responsible for the VAT in respect of the supply of the service to the final consumer.
Intermediary C rebuts the presumption.
C can do so because the required conditions are fulfilled: in the invoice issued by C to B
(for his intermediation service), there is a sufficiently clear reference to the main service
and the service provider (in this 'upper' part of the supply chain the identified service
provider is A) (the requirement from point (a) of the second subparagraph of Article 9a(1)
is met); contractual arrangements confirm that C is supplying only some intermediation
services to B and that the responsibility for providing the main service moves to B. The
requirement from point (b) of the second subparagraph of Article 9a(1) is fulfilled by D
who issues the bill or receipt to consumer F where the service and the service supplier are
identified (the service provider in this 'lower part' of the chain is D).
At the same time C is not excluded from the possibility to rebut the presumption because
he is not authorising the charge to the customer nor is he authorising the delivery of the
service nor is he setting the general terms and conditions.
It is important to note that C in order to fulfil the requirements from Article 9a needs to
have sufficient information about the main service and the service provider. Normally C
would need to rely on information provided by B who in turn should receive it from A (the
content owner/developer/initial service provider).
In the case C does not have enough information he will be caught by the presumption.
Intermediary B rebuts the presumption.
B can do so because the required conditions are fulfilled: in the invoice issued by B to A
(for his intermediation service), there is a sufficiently clear reference to the main service
and the service provider and in the invoice issued by A to D the main service and the
service supplier (in this 'upper' part of the supply chain the identified service provider is
A) are identified (the requirement from point (a) of the second subparagraph of
Article 9a(1) is met); contractual arrangements confirm that B is supplying only some
intermediation services and that the main service is provided by A. The requirement from
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point (b) of the second subparagraph of Article 9a (1) is fulfilled by D who issues the bill
or receipt to consumer F where the service and the service supplier are identified (the
service provider in this 'lower part' of the chain is D).
At the same time B is not excluded from the possibility to rebut the presumption because
he is not authorising the charge to the customer nor is he authorising the delivery of the
service nor is he setting the general terms and conditions.
It is important to note that B in order to fulfil the requirements from Article 9a needs to
have sufficient information about the main service and the service provider. Normally B
would need to rely on information provided by A.
In the case B does not have enough information he will be caught by the presumption.
A (the content owner/the developer/initial service provider) supplies the service to D and
issues a normal B2B invoice. He does not have a direct contact with the final consumer.
3.4.8.
How does the presumption apply in respect of telephone services provided over
the Internet?
Article 9a, in its paragraph 2, provides that where internet telephone services are supplied
through a telecommunications network, an interface or a portal under the same conditions
as set out in paragraph 1 then this paragraph applies.
Since telephone services can be supplied via intermediaries, there is also a need for a
presumption as to who is actually supplying the service to the final consumer. Telephone
services provided over the Internet, including voice over Internet Protocol (VoIP) are to be
treated in the same way as electronic services in the context of Article 9a.
3.5.
Detailed issues arising from this provision
3.5.1.
When does Article 9a apply? – the chart
The chart below presents a high level illustration on how Article 9a should be applied.
For more detailed information please read the whole Chapter 3. The definitions of
electronic and telecommunications services are dealt with in Chapter 2.
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Are you involved in the supply of electronic services or telephone services provided via the
Internet which are delivered through a chain of transactions?
(For more information see in particular point 3.4.3)
no
yes
Article 9a does not
apply
Do you provide only services which are not sufficiently
relevant in order for you to be seen as taking part in the
supply (such as payment processing or merely making the
communication network available)?
(For more information see in particular
points 3.4.3 and 3.4.4)
yes
no
You are caught by the presumption from Article 9a.
Presumption from
Article 9a applies.
Do you want to rebut it?
(For more information see in particular
points 3.4.2 and 3.4.5)
You act as the service
provider of the main
service.
no
In the situation you
supply telecommunications, broadcasting or electronic
services to:
yes
Do you authorise the charge to the customer and/or authorise the delivery of the
services and/or set the general terms and conditions of the supply?
(For more information see in particular point 3.4.6)
yes
You cannot rebut
the presumption.
no
Is the following information identified in a sufficiently clear way on any invoice
issued to another taxable person or any bill or receipt issued to a final consumer:
1) another intermediary
- you issue an
invoice,
2) a final consumer
- you issue a bill or
receipt and
- you are responsible for VAT.
no
- the main service supplied (electronic services or internet telephone) and
- the supplier of that service (the initial service provider or an intermediary
covered by the presumption from Article 9a),
yes
AND
is it reflected in the contractual arrangements?
3.5.2.
You supply an
intermediary or
similar service
Why is this presumption not placed together with the other presumptions?
This provision provides for a presumption, as do the provisions in subsection 3a. It should
be noted however that subsection 3a focuses on the location of the customer, whereas
Article 9a provides a presumption for who the supplier of the services is. The right
approach, in line with the logic of the VAT Directive, is first to identify correctly the
supplier of a service. The next step is then to correctly assess the nature of the service and
only after that to determine where the customer belongs. For that reason Article 9a could
not be placed together with the rest of the presumptions.
3.5.3.
Why does this presumption not cover broadcasting services?
As explained under point 2.4.2 the definition of broadcasting services in Article 6b is
relatively narrow and requires that the supplier has ‘editorial responsibility’ over the
content in order for the service to be covered by it.
Under Article 9a, in accordance with the presumption where it applies, the ‘intermediary’
in the supply of broadcasting would become the service provider (broadcaster) as he could
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not exclude himself from this position because of the additional conditions included in this
provision (as a result of the third subparagraph of paragraph 1).
For that reason (since it would not be possible to exclude the application of the
presumption under the first subparagraph of paragraph 1) it was not found appropriate to
include broadcasting services in Article 9a.
3.5.4.
What are telecommunications networks?
See the glossary under point 1.6.
3.5.5.
What is an interface or a portal?
See the glossary under point 1.6.
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4.
PLACE WHERE A NON-TAXABLE LEGAL PERSON IS ESTABLISHED (ARTICLE
4.1.
Relevant provision
13A)
The relevant provision can be found in the VAT Implementing Regulation:
 Article 13a
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
4.2.
Background
Within the VAT system, a final consumer (also referred to as a non-taxable person) can be
a natural person (that is a private individual) or a legal person (such as a public authority).
Where telecommunications, broadcasting or electronic services are supplied to a private
individual, VAT, as a rule, will be due at the place where the private individual has his
permanent address or usually resides (as from 2015).
If for these supplies the customer is a (non-taxable) legal person, the determining factor
will be the place where that person is established.
In that respect, for the application of the place-of-supply rules it is important to remember
that in accordance with Article 43(2) of the VAT Directive a non-taxable legal person
identified for VAT purposes must be regarded as a taxable person.
When VAT will need to be charged at the place where the final consumer is ‘established’
(if it is a legal person) or at the place where he has his ‘permanent address’ or ‘usually
resides’ (when the customer is a natural person), it is necessary to be clear on the meaning
of these three concepts.
Articles 12 and 13 already provide guidance on the concepts of permanent address and
usual residence. The permanent address is the address of a natural person entered in the
population or similar register, or the address indicated by that person to the relevant tax
authorities. It is also made clear that a natural person usually resides at the place where
that person usually lives as a result of personal and occupational ties. Where these ties are
in different countries, the usual residence will be determined by the personal ties which
show close links between the person and a place where he is living.
4.3.
Why was there a need for clarification?
A legal person belongs to the place where it is established. For legal persons carrying out
economic activity (taxable persons), guidance on the place of establishment can be found
in Articles 10 and 11 but there is no such guidance as regards legal persons without
economic activity (non-taxable legal persons).
In that context, it was necessary to clarify the concept of ‘established’, which is now
included in Article 13a.
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4.4.
What does the provision do?
Article 13a defines the place where a non-taxable legal person is established or has an
establishment.
That is the place where the functions of its central administration are carried out
(performed/executed), or any other place characterised by a sufficient degree of
permanence and a suitable structure in terms or human and technical resources to enable it
to receive and use the services supplied to it for its own needs (that is the place from
which it operates activities).
Unlike a taxable person, a non-taxable legal person will normally not be engaged in
economic activities. It was therefore necessary to give separate guidance on the place
where a non-taxable legal person is established.
The definition, and the tests to be applied, however reflects the existing principles for
determining the place of business of a taxable person (Article 10) and any fixed
establishment that it may have (Article 11(1)).
The elements used are similar to those applied in the case of a taxable person but have
been adapted to tailor the situation of a non-taxable person who will not be involved in
business.
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5.
STATUS OF CUSTOMER NOT COMMUNICATING HIS
NUMBER (ARTICLE 18)
5.1.
Relevant provision
VAT
IDENTIFICATION
The relevant provision can be found in the VAT Implementing Regulation:
 Article 18(2), second subparagraph
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned
5.2.
Background
As from 1 January 2015, the place of taxation for the supply of telecommunications,
broadcasting and electronic services will be the same for B2B (business to business) and
B2C (business to final consumer) supplies.
Regardless of this change it will still be necessary for the supplier to determine the status
of the customer (whether he is a business or a final consumer) as it will influence the VAT
liability of the supplier. Where the supply is made to a final consumer, or if the customer
is established in the same Member State as the supplier, the supplier will be liable to
account for the tax. In cases where the supply is made to a taxable customer who is
established in a Member State other than that of the supplier the latter should not charge
VAT as it will be for the customer to account for the tax under the reverse charge
mechanism.
5.3.
Why was there a need for clarification?
Article 1811 is relevant when identifying the status of the customer is necessary in order to
correctly apply rules for the place of supply of services. To verify the status of the
customer and the place where he belongs, a supplier will often rely heavily on the VAT
identification number communicated by his customer.
Paragraph 1 tells the supplier when he can regard an EU customer as a taxable person.
That is the case when the customer communicates his VAT identification number, or
shows that he is in the process of registering for VAT.
Where no VAT identification number has been communicated, the first subparagraph of
paragraph 2 tells the supplier that the customer can be regarded as a non-taxable person
but only if there is no information to the contrary.
In relation to telecommunications, broadcasting and electronic services as from 2015 the
status of the customer will not influence the identification of the place of supply.
Therefore, regardless of whether the customer is a taxable person or a final consumer, the
revenues will accrue to the same Member State.
11
Article 18 helps the supplier to identify the status of the customer but the provision does not change it. It
is important to remember that any person who independently carries out in any place any economic
activity, whatever the purpose or results of that activity, must be regarded as a taxable person. To be a
taxable person, registration is not required. In other words the fact that a taxable person does not have a
VAT identification number does not change his status.
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Explanatory Notes – published 3 April 2014
For these services, there is often a high volume of low value supplies taking place and
therefore it is particularly important that the business is able to establish the status of its
customers rapidly and with certainty. In other words it is necessary for a business to have
more certainty when deciding whether or not to charge VAT. For these reasons the second
subparagraph of Article 18(2) was introduced. It aims to simplify the application of rules
in respect of telecommunications, broadcasting and electronic services.
5.4.
What does the provision do?
The second subparagraph of Article 18(2), facilitates businesses in distinguishing business
customers from customers who are final consumers. Its main purpose is to provide more
legal certainty for the supplier as to the status of his customer by disregarding information
other than the VAT identification number.
The supplier of telecommunications, broadcasting and electronic services may regard any
customer who does not provide him with a VAT identification number as a non-taxable
person. This will allow the supplier to determine immediately and with certainty whether
payment of VAT falls to him (as it does for any supply to a non-taxable person, or to a
taxable person in the same Member State) or whether the customer needs to account for
the tax (because the supply is to a taxable person in another Member State).
It is optional for the supplier to avail himself of this provision.
The supplier can treat customers without a VAT identification number as final consumers.
By doing this, he protects himself against any liability later on if the customer never
communicates his VAT identification number to him, which could be taken as an
indication that the customer did in fact not act as a taxable person.
However the supplier is not compelled to treat a customer who is a taxable person acting
as such, as a final consumer: if he would want to treat him as a taxable person, although
his client has not yet communicated him his VAT identification number, he can do so. The
burden of proof will however then be on his shoulders and to avoid liability he will need
sufficient information to substantiate the status of his customer.
Concerning the customer, once the VAT identification number is attributed to him, he is
obviously obliged, under Article 55, to communicate it forthwith to the supplier to enable
him to submit a recapitulative statement as required.
This option is available for the supplier as long as the customer has not communicated his
VAT identification number. Where, despite being a taxable person, the customer is treated
as a final consumer, the customer cannot recover the VAT which instead becomes a final
cost for him. To avoid depriving the customer of his rights, he should be given the
possibility to rectify the situation with his supplier. The option for the supplier therefore
only applies until the moment that the customer communicates his VAT identification
number. In that case, the supplier will need to make the necessary adjustments in
accordance with the normal rules. That could include refunding any VAT previously
charged to the customer and making the necessary adjustments in his VAT (MOSS)
return.
The customer should communicate his VAT identification number within a reasonable
time of the supply. If a customer is very late in doing so, normally it could be assumed
that he was not acting as a taxable person when buying the service.
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Explanatory Notes – published 3 April 2014
When dealing with concrete cases it should be kept in mind that this facilitation measure
will not have any revenue implication for the Member State of the customer.
5.5.
Detailed issues arising from this provision
5.5.1.
Is a supplier compelled to treat a customer without a VAT identification number
as a final consumer?
Irrespective of information to the contrary, the supplier ‘may’ regard a customer as a nontaxable person as long as that customer has not communicated his individual VAT
identification number. The second subparagraph of Article 18(2) does not, however,
compel him to do so. If he has other information to substantiate the status of the customer
as a taxable person, the supplier can treat him as such but he then assumes the risk in case
things go wrong with his customer.
5.5.2.
How should a supplier treat a customer established outside the EU?
Where telecommunications, broadcasting and electronic services are supplied to
customers established or residing outside the EU, the supply falls outside the scope of EU
VAT. That is so irrespective of the status of the customer.
Unless the rule of effective use and enjoyment as laid down in Article 59a of the VAT
Directive is applied, the supplier does not need to know the status of the customer but only
needs to determine the place where that customer belongs. That is also confirmed by
Article 3.
5.5.3.
What was the reason for using ‘may’ instead of ‘shall’ in Article 18(2)?
The use of ‘may’ in the second subparagraph of Article 18(2) makes it optional for the
supplier to use this provision.
A reference to ‘shall’ would have forced a supplier who did not receive a VAT
identification number from his customer to treat this customer as a non-taxable person.
However it is not excluded that, even in the absence of a VAT identification number, the
supplier knows that his customer is in fact a taxable person and the reference to ‘may’
then allows him to refrain from treating that customer as a non-taxable person.
If the supplier has sufficient information to substantiate that the customer is in fact a
taxable person, he is therefore not compelled to treat that customer as a non-taxable person
and can issue an invoice without VAT if, in accordance with Article 196 of the VAT
Directive, the latter is required to account for VAT.
5.5.4.
What are the repercussions if the supplier decides not to avail of the option
included in the second subparagraph of Article 18(2)?
In the absence of a VAT identification number, when the supplier does not use the option
in the second subparagraph of Article 18(2), he needs to be able to substantiate that the
customer is in fact a taxable person. If this is not possible, the supplier could be held liable
for payment of the VAT on account of the customer being a non-taxable person.
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Explanatory Notes – published 3 April 2014
5.5.5.
What would the supplier need to do if the customer later communicates his VAT
identification number to him?
Where the customer has not supplied a VAT identification number and the supplier has
doubts about the status of the customer, the supplier can protect himself by treating the
customer as a non-taxable person until such VAT identification number is provided (if
ever).
However, this initial assessment will have to be reviewed and corrected should the
customer subsequently communicate his VAT identification number to the supplier. In
this place it is important to remember Article 25 which states that for the application of
the rules governing the place of supply of services, only the circumstances existing at
the time of the chargeable event shall be taken into account.
Once the customer communicates his VAT identification number, the supplier will need to
make the necessary adjustments (issue of corrected invoice, refund of VAT charged to the
customer, correcting his VAT (MOSS) return …).
5.5.6.
When should the customer communicate his VAT identification?
A customer who upon purchase is in the process of registering, will be unable to
communicate a VAT identification number and could then see himself be treated as a nontaxable person by the supplier. Once registered, the customer will however be in a position
to communicate his VAT identification number. If he does so, the supplier can no longer
rely on the option laid down in the second subparagraph of Article 18(2).
Communication would need to be timely and should therefore be done within a reasonable
time span. Suppliers are able to foresee in their contractual arrangements what they
consider as a “reasonable time span”. It could also be that under national law,
communication would need to be made within a certain time span.
5.5.7.
Can a customer who is a taxable person but has been treated as a non-taxable
person by the supplier recover the VAT charged to him by that supplier?
If the customer does not communicate his VAT identification number, the supplier may
decide to treat him as a final consumer and charge VAT. That VAT should not, in normal
circumstances, have been charged by the supplier. If this is the case, the VAT that has
been charged can be recovered but not from the tax authority through any of the normal
deduction/refund procedures. The customer will instead need to engage with the supplier
to rectify the situation.
5.5.8.
What should be done where a customer communicates a VAT identification
number but the supplier has doubts about the status of the customer or the
capacity in which he is acting?
In accordance with Article 18(1)(a) the supplier may regard the customer as a taxable
person when the latter communicated his VAT identification number, the number was
sucessfully verified in VIES and there is no information suggesting that the customer is
not a taxable person. Therefore in the case where, on the basis of other available
information, the supplier has doubts about the status of the customer or the capacity in
which he is acting, he could decide that the communication of the VAT identification
number in itself is not sufficient to treat the customer as a taxable person. In his decision
the supplier should take into account the wording of Article 19.
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Explanatory Notes – published 3 April 2014
5.5.9.
Is there a contradiction between the option provided under the second
subparagraph of Article 18(2) and the requirement existing in some Member
States to include the VAT identification number on the invoice in order for the
supplier to be able not to charge VAT in respect of cross-border supplies of
services?
No, there is no contradiction between those two elements. The second subparagraph of
Article 18(2) gives an option for the supplier when the customer did not communicate his
VAT identification number. However in the cases where Member States are more strict in
their requirements for accepting that it is justified, in the absence of the VAT number of
the client, that VAT is not charged by the supplier on cross-border supplies of services, the
choice for the supplier not to use this option (to treat the customer as a final consumer)
will in practice be limited.
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Explanatory Notes – published 3 April 2014
6.
CUSTOMER ESTABLISHED OR RESIDING IN MORE THAN ONE COUNTRY
(ARTICLE 24)
6.1.
Relevant provision
The relevant provision can be found in the VAT Implementing Regulation:
 Article 24
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned
6.2.
Background
For B2C supplies, the place of taxation depends on where the final consumer is
established or has an establishment (if it is a non-taxable legal person) or where he has his
permanent address or usually resides (in the case of a natural person).
6.3.
Why was there a need for clarification?
Where a customer is established or resides in more than one country, this could give rise
to conflicts concerning jurisdiction between Member States as to which, if any, would
have the right to tax. This could result in double taxation.
Priority should be given to the place that best ensures taxation at the place of actual
consumption of the services. To clarify that concept, further guidance was however
necessary.
6.4.
What does the provision do?
Article 24 gives the necessary guidance to avoid conflicts between Member States that
could see the supplier being faced with double taxation where the final consumer is
established or resides in more than one country.
It is relevant in those situations where the services supplied to a final consumer are taxable
at the place where the final consumer belongs like in the case of telecommunications,
broadcasting and electronic services (Article 58 of the VAT Directive).
Where such services are supplied to a non-taxable legal person priority will be given to the
place where the functions of its central administration are carried out (point (a)). This is
the case unless there is evidence that the services are used at another establishment of that
non-taxable legal person.
If the supply is made to a natural person, the usual residence of that person should be
given priority (point (b)). The permanent address should be used only if there is evidence
that the services are used there.
The purpose is, as pointed out in Recital 7 of Regulation 1042/2013, to give priority to the
place that best ensures taxation at the place of actual consumption of the services.
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Explanatory Notes – published 3 April 2014
6.5.
Detailed issues arising from this provision
6.5.1.
How should the presumptions in Articles 24a and 24b be applied where the
customer is established or resides in more than one country?
This provision seeks to avert conflicts of jurisdiction between Member States as to which,
if any, has the right to tax.
Where one of the specific presumptions laid down in Article 24a or in points (a), (b) or (c)
of Article 24b applies the place of supply is identified by reference to particular indicators
that point to the place where the customer is established or resides12. Therefore a conflict
between two places of establishment or residence could only arise if a tax authority would
rebut one of the specific presumptions because there are indications of misuse or abuse by
the supplier. If after the rebuttal of one of those presumptions, on the basis of available
information, the customer is identified as being established or residing in more than one
Member State Article 24 would be relevant.
If none of the specific presumptions applies, the place where the customer belongs is
presumed to be the place identified as such by the supplier on the basis of two items of
non-contradictory evidence pursuant to point (d) of Article 24b. It is particularly relevant
in that case, if on the basis of available information, the customer is identified as being
established or residing in more than one Member State, to look to Article 24 for guidance.
6.5.2.
How should Article 24f dealing with evidence, be applied where the customer is
established or resides in more than one country?
Article 24f gives a non-exhaustive list of items of evidence which could be used by the
supplier when identifying the place where a final customer is established, has a permanent
address or usually resides. In the cases where, on the basis of available evidence, the
supplier identifies two countries where the customer is established or resides, he must
choose the country of taxation in accordance with Article 24 (see also point 6.4).
12
The scope of the specific presumptions from Articles 24a and 24b(a)-(c) is described in more detail in
Chapter 7.
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Explanatory Notes – published 3 April 2014
7.
PRESUMPTIONS FOR LOCATION OF CUSTOMER (ARTICLES 24A AND 24B)
7.1.
Relevant provisions
The relevant provisions can be found in the VAT Implementing Regulation:
Digital supplies at a physical location of the supplier:
 Article 24a
Digital supplies through a fixed land line:
 Article 24b, point (a)
Digital supplies via mobile networks:
 Article 24b, point (b)
Digital supplies using a decoder:
 Article 24b, point (c)
Other digital supplies:
 Article 24b, point (d)
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
7.2.
Background
As from 1 January 2015, in accordance with Articles 44 and 58 of the VAT Directive,
telecommunications, broadcasting and electronic services will, in all cases, be taxable at
the place of the customer. That is the case irrespective of whether those services are
supplied by EU or non-EU businesses and independently of the status of their customer
(as a taxable or a non-taxable person).
7.3.
Why was there a need for clarification?
Telecommunications, broadcasting and electronic services (digital services) are usually
supplied at a distance and the supplier needs to be able to determine in an easy way the
location of his customer, so that the VAT treatment can be automated imposing as little
administrative burden as possible.
Where each single supply may be of small value but at the same time the number of
transactions is very high, there is a need for presumptions to facilitate the practical
application of the rules applicable from 2015. There are also situations where, because of
the particular setting in which the digital service is supplied it is very difficult to identify
not only the location but also the status of the customer. Also in those cases a presumption
is needed. All these presumptions must obviously be consistent with the rules set by the
VAT Directive.
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Explanatory Notes – published 3 April 2014
The presumptions are intended to offer some flexibility in terms of future IT
developments. With technology constantly changing, it is likely that new
telecommunications, broadcasting and electronic services will come on to the market. If
the scope of the presumptions is too restrictive, there would be a risk that they may not
serve their purpose.
7.4.
What do the provisions do?
The provisions included in subsection 3a provide for presumptions where it is extremely
difficult, if not practically impossible, for the supplier to know where the customer is
actually established, has his permanent address or usually resides. To facilitate
application, presumptions are given for the location of the customer.
Most of the presumptions deal with the application of the rules applicable as from
1 January 2015 (Articles 24a and 24b)13. In setting those presumptions, account is taken of
the technical IT solutions currently available for businesses.
For a given presumption to apply the supply needs to be made under certain prescribed
circumstances. It is also important to remember that all of the presumptions included in
subsection 3a are rebuttable.
Subsection 3a is closely linked with subsections 3b and 3c. Subsection 3b deals with the
rebuttal of presumptions by the supplier or by a tax authority (in the latter case only if
there are indications of misuse or abuse by the supplier). Subsection 3c focuses on
evidence for the identification of the location of the customer and rebuttal of
presumptions. Further explanations on subsections 3b and 3c are given in Chapters 8 and
9.
7.4.1.
Presumption applicable for both B2B and B2C supplies
Article 24a provides for a rebuttable presumption applicable for Articles 44, 58 and 59a of
the VAT Directive. That means that it covers both B2B and B2C supplies. If that had not
been the case the initial purpose of the presumption would be lost as the supplier would
then have to monitor each transaction in order to check whether his customer is a business
or a private individual.
This presumption applies to digital services provided at certain physical locations
(paragraph 1). That is also the case where the physical location is situated on board a ship,
aircraft or train carrying out a passenger transport operation (paragraph 2).
It does not cover however ‘over the top’ services. Those are services which can only be
delivered thanks to a connection that is established via the communication networks but
do not require the physical presence of the recipient at the location where the service is
supplied. The underlying service (which under specific conditions may be covered by
Article 24a) allowing for ‘over the top’ services to be delivered is normally a
telecommunications service.
13
Subsection 3a also contains Article 24c which provides a presumption for the application of
Article 56(2) of the VAT Directive according to which the hiring of means of transport, other than
short-term hiring, to a non-taxable person is taxable at the location of the customer. There will be
separate Explanatory Notes on the VAT changes on the place-of-supply rules for long-term hiring of
means of transport that entered into force in 2013.
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Explanatory Notes – published 3 April 2014
The applicability of each presumption has to be assessed by the supplier on the basis of
available information (i.e. any information a supplier has or should have had).
7.4.1.1. Digital supplies at a physical location of the supplier
With the presumption as laid down in Article 24a(1) a supplier can assume that the
customer is established, has his permanent address or usually resides at the place of the
location where the service is being supplied by him and where the customer is present in
person because his physical presence is required for receiving that service. That would
then be the place where the service supplied by that supplier is taxable.
The list of examples of locations (telephone box, telephone kiosk, wi-fi hot spot, internet
café, restaurant, hotel lobby) is only illustrative and the presumption could therefore apply
where supply is made at another similar location. It however requires that the basic
conditions of the presumption are met.
This presumption only covers the services rendered by the supplier at his location but not
services supplied by other service providers. Therefore it will cover the case where a fee is
paid by the customer to be able to surf on the Internet during 1 hour spent in an internet
café, but not downloads made by him from the Internet. The latter services (which can be
referred to as ‘over the top’ services) do not require to be supplied at the physical location
of the supplier and are therefore not covered by the presumption in Article 24a(1).
For example, a UK resident customer goes on a holiday in Spain and buys a two-hour
access credit to be able to use an internet connection at a resort’s internet café. Pursuant to
Article 24a(1), the credit is subject to Spanish VAT. Any other supplies (over the top
services) bought by the customer while using the connection will not be covered.
If the same customer would buy and download MP3 songs from an online-sales platform
not through the wi-fi connection of the internet café but through his UK mobile operator’s
network then Article 24a does not apply. Firstly the telecommunications service does not
in that instance require the physical presence of the customer at the internet café. Secondly
downloading MP3 songs is in any case an ‘over the top’ service. Therefore in this second
situation if the customer is using his UK mobile phone (i.e. the mobile country code of the
SIM card is the UK), then UK VAT will be applicable on the telecommunications service
and on the sale of the MP3 song.
The presumption covers all three types of services so as to accommodate for services with
similar features being supplied under the same circumstances (supplied to a customer at
the physical location of the supplier, without knowing the exact location of the customer –
i.e. where he is established, has a permanent address or usually resides).
It is first and foremost relevant for telecommunications services as the services mainly
concerned would be telephone calls (when at a telephone box or kiosk) or access to the
Internet (at a wi-fi hot spot or in an internet café). However, it could also apply to certain
broadcasting and electronic services, for example in the situation where gaming machines
are being operated (in arcades, in pubs, in bars) or entertainment is on offer (gaming
relying on localised servers for example in cafés or kiosks).
As the physical presence of the customer at the location is needed for him to receive the
services, it is also presumed that these services are effectively used and enjoyed at the
place of that location. Only services which do not require physical presence of the
customer at the supplier’s location can be used and enjoyed elsewhere.
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Explanatory Notes – published 3 April 2014
7.4.1.2. Digital supplies at a physical location of the supplier on board means of
transport
Complications could arise if telecommunications, broadcasting or electronic services are
being supplied at a location which is moving. Where the location is situated on board a
ship, an aircraft or a train carrying out a passenger transport operation effected within the
EU, the country of that location is therefore deemed to be the country of departure of the
transport. That follows from Article 24a(2).
Reference is made to ‘passenger transport operation effected within the Community
pursuant to Articles 37 and 57 of the VAT Directive’. That means that the deeming
provision in Article 24a(2) only covers the section of the passenger transport operation
effected within the Community as defined in Articles 37(2) and 57(2) of the VAT
Directive. Other parts of a passenger transport operation (including journeys outside the
EU) are therefore not covered by that provision.
Article 37(2) (as well as Article 57(2)) of the VAT Directive defines the section of
passenger transport operation effected within the Community as being ‘the section of
the transport operation which takes place, without a stopover outside the Community,
between the point of departure and the point of arrival of the transport’. It also clarifies
that the point of departure of a passenger transport operation is the first scheduled point of
passenger embarkation within the EU, where applicable after a stopover outside the EU.
It should be underlined that in accordance with Articles 15 and 35 the section of passenger
transport operation effected within the EU needs to be determined by the journey of the
means of transport and not by the journey completed by each of the passengers.
As the territorial scope of the presumption in this case is directly based on that definition,
the reference to ‘the country of departure’ should be understood in the same way as ‘the
point of departure’ is defined by Articles 37 and 57 of the VAT Directive. No room for
manoeuvre is left for an extension of its territorial application.
To illustrate this, if a cruise starts in Spain, calls at Portugal and France and completes its
voyage in the UK and the cruise operator provides telecommunications, broadcasting or
electronic services in such a way that the physical presence of the customer is required
(for example via a bespoke network) then Spanish VAT should be paid by the supplier in
relation to these services.
The application of the presumption in Article 24a(2) has not been extended to the situation
where the supply is made outside the section of a passenger transport operation effected
within the EU (which also includes international journeys) as that would run counter to the
logic currently applied for on-board supplies in general (as included in Articles 37 and 57
of the VAT Directive). In other words the presumption included in paragraph 2 cannot be
applied to on-board supplies beyond the section of passenger transport operation effected
within the EU.
Telecommunications, broadcasting and electronic services supplied on board ships,
aircraft or trains carried out outside the section of passenger transport operation
effected within the Community (in the sense as explained above) are therefore covered
by Article 24a(1) or, if the conditions of that presumption are not met, by one of the other
presumptions included in Article 24b (in practice that will be either the specific
presumption based on the use of a SIM card or the general presumption).
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Explanatory Notes – published 3 April 2014
Therefore if a cruise starts in Spain, calls in Morocco and Tunisia and completes its
journey in Italy, Article 24a(2) will not apply as the journey will not take place within the
section of passenger transport operation effected within the Community.
In such a case if services (e.g. roaming services) provided on board require the physical
presence of the customer then Article 24a(1) will need to be used, i.e. the physical location
of the boat at the moment a service is provided will be decisive. In practice in the example
where a cruise starts in Spain, calls in Morocco and Tunisia and completes its journey in
Italy, this means that in Spanish territorial waters, Spanish VAT will apply; in Italian
territorial waters, Italian VAT will apply; outside EU territorial waters no EU VAT will
apply.
However where a customer purchases such services from his normal operator as an
element of the overall package of mobile services it should be clear that these services are
exclusively covered by Article 24b(b) and the country code of the customer’s SIM card
will be decisive.
7.4.2.
Presumptions applicable only to B2C supplies
Article 24b provides for rebuttable presumptions for certain supplies covered by
Article 58 of the VAT Directive. The presumptions apply to B2C supplies only.
These presumptions are limited in scope and therefore do not extend to B2B supplies
including cases of mixed use, where Article 44 of the VAT Directive instead applies.
The applicability of each presumption has to be assessed by the supplier on the basis of
available information (i.e. any information a supplier has or should have had). Therefore it
may happen that some services will not be covered by these specific presumptions because
of the lack of available information on how they were delivered to the customer. In some
instances it may concern certain ‘over the top’ services14 but other services may also be
affected.
7.4.2.1. Digital supplies through a fixed land line
Point (a) of Article 24b deals with cases where services are supplied to the customer (a
non-taxable person) via a fixed land line connected to a building. As that is normally the
place where the service will be used, the presumption is that the customer belongs there.
This presumption is not limited in scope but will cover any supply of telecommunications,
broadcasting and electronic services made via a fixed land line. For the presumption to
apply the supply must be made to the non-taxable person via his fixed land line. There
must therefore be a link between the fixed line and the customer in question to indicate
that the customer actually belongs at the place of installation of the fixed land line. That
would cover a fixed land line which is residential (whether installation is made for the
owner of the building or for a tenant) or the like (where installation is made at a building
used by a non-taxable legal person for its activities) but not the situation where the place
of installation of the fixed land line is one used for running a business.
This means that when services are supplied to a customer via his fixed land line, the
customer is presumed to be actually located there and the supplier will be able to rely on
that (regardless of whether the fixed land line belongs to that supplier or to a third party)
14
A definition of ‘over the top’ services can be found in point 1.6.
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Explanatory Notes – published 3 April 2014
unless he can rebut this presumption on the basis of three items of evidence. If, for
example, the services are supplied to a fixed land line installed in a summer house but the
supplier has 3 items of non-contradictory evidence indicating that his customer is
established or resides elsewhere (e.g. the billing address, bank details and other
commercially relevant information indicating another Member State than that of the fixed
land line), then the presumption could be rebutted by the supplier. Where the supplier
rebuts the presumption the supply will be deemed to be supplied at the location indicated
by those 3 items of evidence.
In the case where, in a given location, apart from a fixed land line, a decoding device or a
viewing card is also being used for supplying the services then the presumption that has its
basis in the fixed land line, takes precedence.
7.4.2.2. Digital supplies via mobile networks
Point (b) of Article 24b covers the cases where the customer (a non-taxable person) makes
use of a SIM card to receive telecommunications, broadcasting or electronic services
(regardless of whether these are pre-paid credits or post-paid services).
A SIM card will mostly be used in the country indicated by the mobile country code
attributed to the card and the country of issue of the SIM card is therefore key in
establishing where the customer belongs for the purposes of determining in the place of
supply. The presumption is that the customer is established, has his permanent address or
usually resides there.
This presumption is particularly useful in the case of pre-paid credits on a SIM card
because such credits can be used for much more than paying for telephone calls or
accessing the Internet15 and the supplier of the credits cannot know in advance what the
customer will use those credits for.
In both cases (pre-paid credits and post-paid services) the supplier will be able to rebut the
presumption if he has 3 items of non-contradictory evidence indicating that his customer is
established elsewhere.
7.4.2.3. Digital supplies using a decoder
Point (c) of Article 24b states that where a decoder or similar device or a viewing card is
needed to receive the services, the customer (a non-taxable person) can be presumed to
belong where the device is located or where the viewing card is sent to for use there. The
presumption does not apply in cases where the device is sold and the supplier does not and
cannot know where it will be located or where the viewing card is sold but not sent to the
customer. If, in a given location, a fixed land line is used together with a device or
viewing card for the services to be supplied then the presumption in point (a) of
Article 24b applies.
7.4.2.4. Other digital supplies
All supplies of telecommunications, broadcasting and electronic services not covered by a
specific presumption (included in Article 24a or points (a), (b) or (c) of Article 24b), are
15
The SIM card country code presumption is only relevant for supplies of telecommunications,
broadcasting and electronic services to determine their place of taxation and not for other supplies that
the pre-pay credits may be used for as payment.
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dealt with by point (d) of Article 24b. Under that provision, the customer will be presumed
to belong at the place identified by the supplier on the basis of two items of noncontradictory evidence.
This general presumption should apply only if it is not possible for a specific presumption
to be used. Therefore if the supplier does not have and could not have collected (in normal
commercial circumstances) information or evidence which would have seen the specific
presumption apply he should go beyond that and apply the general presumption. So for
example if a service can be supplied via at least two different channels (a fixed land line or
mobile networks) and the supplier cannot know and should not have known which one
actually was used by the customer for receiving the service he should opt for the general
presumption.
This general presumption is directly linked with Article 24f and provides greater certainty
to the supplier, when determining where to tax. It will be for the supplier to decide which
two items of non-contradictory evidence he considers most reliable in determining the
place where his customer belongs (see also Chapter 9). A balance is struck between the
requirement that the burden of proof should not be disproportionate and the need to avoid
manipulation and abuse. The perception can vary depending on each stakeholder. It is
important to keep it easy and practicable for businesses to comply. On the other hand, it is
also important that Member States have sufficient assurance that the services are taxed at
the right place.
Even if, in some cases, it might be difficult for the supplier to have more than one item of
evidence, it should be emphasised that any commercially relevant information can serve as
evidence and this should allow sufficient flexibility for the supplier to determine in the
right way the location of his customer. The tax administration will be able to contest the
supplier’s assessment only in the case there are indications of misuse or abuse by the latter
(see also Chapter 8).
This presumption, in acting as a ‘catch-it-all’, has the potential to be ‘future-proof’ which
should ensure that account can be taken of new services and emerging technologies.
7.5.
Detailed issues arising from these provisions
7.5.1.
What is the interaction between the various presumptions? – the chart
The interaction is illustrated by the following decision chart which shows the
presumptions for each type of supply:
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Does the supplier know or
should he have known
(under normal commercial
circumstances) that the
supply is made ...
Place – the country of departure
of the journey within the EU
via a telephone box,
an internet café, a
wi-fi hot spot or
similar and
Is the physical
presence of the
customer required
at the location?
yes
via a fixed land line?
Is it located on board a means of
transport travelling within the EU?
yes
no
yes
Place – where the
telephone box or
similar is located
Place – where the
fixed land line is
installed
Rebuttable:
Place – country of SIM
card used to receive
the service
via mobile networks?
yes
via a decoder or a
viewing card without
the use of a fixed land
line?
yes
Place – where the decoder is located or the
viewing card is sent to be used
with hotel
accommodation or
similar?
yes
Place – where the
hotel is located
1) if desired by the
supplier with 3
items of noncontradictory
evidence;
2) by a tax
administration in
case of indications
of abuse or misuse
no
The supplier could not and
should not have known whether
the supply was made via any of
the above mentioned channels
Place – identified
with 2 items of noncontradictory
evidence
Rebuttable by a tax
administration in case of
indications of abuse or
misuse
Evidence:
Billing address
IP address
Bank details
SIM card country code
Location of fixed land line
Other commercially relevant information
7.5.2.
What does a wi-fi hot spot mean?
See the glossary under point 1.6.
7.5.3.
Are prepaid services covered by the presumption for supplies at a physical
location?
No, as normally those services will not require the physical presence of the customer to be
supplied. So where access to e.g. wi-fi hot spots is not limited to a specific location, this
would not be covered Article 24(a).
7.5.4.
Which presumption prevails if there is a possible clash between presumptions?
There might be cases where the various presumptions laid down in Articles 24a and 24b
could clash. Seeing that every presumption refers to telecommunications, broadcasting
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and electronic services, there could perhaps be some confusion as to which one of the
presumptions should be used.
As a first step before answering the question whether there is a clash between
presumptions and if so which one should prevail, a factual assessment of the supply
should be made. In this respect the supplier is required to use all available information.
This obligation extends also to information he should have known (see also Chapter 9).
The problem exists only if one and the same supply of telecommunications, broadcasting
or electronic services fulfils the conditions covered by two separate presumptions.
For supplies made through a fixed land line (governed by point (a) of Article 24b) where a
decoding device is also required (covered by point (c) of Article 24b), it is clearly stated in
the VAT Implementing Regulation that the presumption of the fixed land line prevails.
Further, in situations where there is a doubt whether one of the specific presumptions
(included in Articles 24a and 24b(a)-(c)) or the general presumption (Article 24b(d))
applies the former will always prevail.
For example an app may be purchased by a final consumer in an App Store through his
mobile phone account (the mobile phone bill is charged or credits are deducted) and the
App Store accounts for VAT on his service. Will the App Store in such a situation be able
to use the specific presumption of Article 24b(b) or should it use the general presumption
in Article 24b(d)? The App Store should apply a particular presumption if it has or should
have had (in normal commercial circumstances) the information about the SIM card (in
practice that could mean that the telecom operator would need to share this information)
and knows or should have known that an app is delivered via mobile networks. Otherwise
the App Store will be obliged to find two items of non-contradictory evidence as required
by Article 24b(d).
To sum up if the supplier does not have and could not have collected information which
would fulfil the conditions for the specific presumption to apply he should use the general
presumption (see also Chapter 9).
7.5.5.
How should supplies provided via a SIM card be treated where the mobile
country code also covers territories excluded from the application of EU VAT?
Taxation will, under the presumption laid down in Article 24b(b), be based on the country
code of the SIM card. For some territories outside the scope of the VAT Directive, there
are separate codes whilst for others there are not. For the latter, the presumption could see
credits used in those territories subjected to EU VAT.
It is difficult to see how, with the presumption, this issue can be avoided as, at the moment
the credits are sold, there would be no knowing where exactly the credits will be used (to
take an example: on mainland Spain or in the Canary Islands).
The presumption could be rebutted by the supplier in the case where he has three items of
non-contradictory evidence to substantiate that the customer actually belongs outside the
EU. That would, however, be subject to any use made of the effective use and enjoyment
rule laid down in Article 59a of the VAT Directive.
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7.5.6.
How to understand the reference to a ‘fixed land line’?
The term ‘fixed land line’ should not be understood too restrictively in order to cover
developing new technologies.
See the glossary under point 1.6.
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8.
REBUTTAL OF PRESUMPTIONS (ARTICLE 24D)
8.1.
Relevant provision
The relevant provision can be found in the VAT Implementing Regulation:
 Article 24d (subsection 3b)
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
8.2.
Background
To clarify the tax treatment of B2C supplies of telecommunications, broadcasting and
electronic services (as from 1 January 2015), presumptions for the place where the
customer belongs have been put in place. They are included in Articles 24a and 24b
featured in subsection 3a.
8.3.
Why was there a need for clarification?
All the presumptions included in subsection 3a are rebuttable. Most presumptions are put
in place to provide suppliers with guidance on where the place of taxation is in situations
where the place where the customer belongs is practically impossible to determine or
cannot be determined with certainty.
This does not change the basic rule by which these services are taxable at the place where
the customer is established, has his permanent address or usually resides. Where
information is available to determine the place where the customer actually belongs, the
possibility therefore still remains for a presumption to be rebutted.
In this context, clarity is needed as to what would be required to rebut a presumption and
who could do so.
8.4.
What does the provision do?
Article 24d clarifies that a presumption can be rebutted by the supplier and, under certain
conditions, by a tax authority. Rebuttal by the customer is not possible: determining the
actual place of taxation is the responsibility of the supplier who is the one liable to pay
over VAT on the services supplied to the right tax authority. This provision also specifies
the level of evidence required to rebut a presumption.
8.4.1.
Rebuttal by the supplier
Where a presumption is not already linked to the collection of evidence by the supplier
from his customer, rebuttal is possible on the basis of three items of non-contradictory
evidence. It is relevant with regard to the presumptions in Article 24a and in points (a), (b)
and (c) of Article 24b. Those are specific presumptions.
Where, in the case of any of those presumptions, a supplier has sufficient evidence to
indicate that the customer is established, has his permanent address or usually resides
elsewhere, he can rebut the presumption.
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A supplier is not obliged to rebut a presumption. Even though there can be evidence to
the contrary, the supplier may for determining the place where the customer belongs
decide to rely on the presumption and disregard evidence to the contrary.
For supplies not covered by any of the specific presumptions, evidence is needed to
determine where the customer belongs. That is dealt with by the general presumption in
point (d) of Article 24b.
If neither Article 24a nor Article 24b(a)-(c) applies, the presumption is that the customer is
established, has his permanent address or usually resides at the place identified by the
supplier based on two items of non-contradictory evidence collected by him. By setting in
Article 24b(d) the level of evidence at two items, the general presumption already allows
for adjustment where more than two items of evidence are available. It is therefore only in
the case of the specific presumptions that the rebuttal provided for in Article 24d is
relevant.
8.4.2.
Rebuttal by a tax authority
Presumptions have been put in place to clarify the tax treatment of B2C supplies that are
taxable at the place where the customer is established, has his permanent address or
usually resides. For the supplier it is important to know that he can rely on a presumption.
To ensure legal certainty, the scope for a tax authority to rebut a presumption is limited to
situations where there are indications of misuse or abuse by the supplier. That could
include cases where a supplier adopts a practice that would see the place of supply
incorrectly determined in relation to a proportion of his customers that is not negligible,
even if this may not necessarily result in a clear tax advantage for the supplier or his
customers. It however only implies deliberate actions or negligence on the part of the
supplier and would therefore not cover genuine mistakes.
For example, it could be taken as misuse or abuse if a mobile virtual network operator16
established in low VAT rate Member State A would market mobile telephony services to
customers in high VAT rate Member State B, issuing and selling SIM cards to those
customers with the country code of Member State A.
A tax authority can rebut any of the presumptions in cases where there are indications of
misuse or abuse by the supplier. That includes the general presumption that allows the
supplier to determine the location of the customer on the basis of two items of noncontradictory evidence. If that evidence is manipulated, the tax authority could decide to
rebut the presumption.
There is no particular mention of the evidence that a tax authority could use to rebut a
presumption. A list of items of evidence is included in Article 24f but given that the
presumption can only be rebutted if there are indications of misuse or abuse, it does not
restrict the tax authority in its use of evidence.
The provision and control of evidence of the actual place where the customer belongs
could, in some instances, impose a disproportionate burden, or pose problems of data
protection. Therefore rebuttal should be kept to a minimum. That is particularly so where
the service is occasional, habitually involves small amounts and requires the physical
16
A Mobile Virtual Network Operator (MVNO) is a wireless communications service provider who does
not own the wireless network infrastructure over which services are provided to its customers.
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presence of the customer as is the case with supplies covered by the presumption in
Article 24a.
8.5.
Detailed issues arising from this provision
8.5.1.
Where a presumption applies, is the supplier required to look for further
evidence?
Articles 24a and 24b provide for presumptions to be made regarding the place where the
customer belongs. The supplier may rely on the relevant presumption to determine the
customer’s place (provided that requirements for that presumption are fulfilled) unless he
chooses to rebut the presumption under Article 24d.
The supplier is not required to look for other evidence or to undertake an examination of
items of evidence already available unless he chooses to do so. It is only when he decides
to rebut the presumption that Article 24d requires the use of three items of noncontradictory evidence. In either case (use of the presumption or rebuttal of it by the
supplier), a tax authority will only be able to rebut the assessment made by the supplier if
there are indications of misuse or abuse by him.
8.5.2.
Can presumptions always be rebutted?
As a rule all the presumptions in subsection 3a can be rebutted in accordance with
Article 24d.
The rebuttal of the presumptions is however limited. It is true in particular where
Article 24a applies.
Article 24a provides that when telecommunications, broadcasting and electronic services
are supplied at certain physical locations where it is extremely difficult for the supplier to
know who the customer is or to verify where that customer actually belongs, the customer
is deemed to belong at the place of that location.
Article 24a should be read together with Recital 10 of Regulation 1042/2013 according to
which it could impose disproportionate burden or pose problems of data protection to do
so if a service is occasional, habitually involves small amounts and requires the physical
presence of the customer.
In many of the cases covered by Article 24a, each supply made at those locations will in
practice be occasional and of a very low value. It was therefore agreed that normally in
those cases a ‘de minimis’17 rule should be applied. This should ensure that a
disproportionate burden is not put on businesses which would otherwise have to verify
whether there could be evidence to rebut the presumption for each single service supplied
in those locations.
17
The term ‘de minimis’ is generally used to describe something that is too small or insignificant to be
considered. The term comes from the Latin phrase, ‘de minimis non curat lex’, which means that the
law does not deal with trivial matters.
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8.5.3.
Is it possible to rebut the presumption in Article 24a when supply is made to a
taxable person?
Telecommunications, broadcasting or electronic services supplied to a taxable person are
taxable at the place where that taxable person is established. If the supplier provides those
services at the location of the supplier and where the physical presence of the taxable
person is required for him to receive these services, the presumption in Article 24a will
however apply and the supplier should be able to rely on it.
For the rebuttal of this presumption, the provision has to be read in conjunction with
Article 24d(1).
Article 24d(1) only refers to Article 58 of the VAT Directive in order to list the three types
of services covered – telecommunications, broadcasting and electronic services. This
reference does not limit its application only to non-taxable persons (final consumers) and
it therefore also covers taxable persons as far as Article 24a is concerned.
The presumption could therefore be rebutted if the customer provides sufficient evidence
accepted by the supplier, although the scope for such rebuttal would be limited given that
this presumption should be seen as a ‘de minimis’ rule (see also point 8.5.2).
8.5.4.
Can the presumption in Article 24a be rebutted where a Member State applies the
effective use and enjoyment rule in Article 59a of the VAT Directive?
The effective use and enjoyment rule (from Article 59a of the VAT Directive) derogates
from the general rules according to which the place of supply of services should be
determined according to Articles 44, 45, 56, 58 and 59 of the VAT Directive (for
Article 58 it applies as from 1 January 2015).
Article 59a of the VAT Directive states that in order to prevent double taxation, nontaxation or distortion of competition, Member States may decide to shift the place of
supply of services. Therefore Member States could consider the place of supply of any or
all of those services, if situated within their territory, as being situated outside the EU if
those services are effectively used and enjoyed outside the EU and vice versa.
The presumption in Article 24a allows a supplier to assume that the customer is
established, has his permanent address or usually resides at the place of the location where
the services are being supplied by him and where the customer is present in person
because his physical presence is required for receiving those services.
As the physical presence of the customer at the location is needed for him to receive the
services, it must be presumed that these services are effectively used and enjoyed at the
place of that location. Services used and enjoyed elsewhere are likely to be the subsequent
services supplied by a service provider other than the one supplying at the physical
location. These subsequent services (for example downloads made over the Internet)
referred to as ‘over the top’ services (see the glossary under point 1.6) are not covered by
the presumption.
Taking into account the underlying assumption of effective use and enjoyment of the
services at the location where they are rendered, the situations where this presumption
could be rebutted as a result of the services effectively being used and enjoyed elsewhere
will be very limited if any.
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9.
EVIDENCE FOR IDENTIFICATION OF LOCATION OF CUSTOMER AND REBUTTAL OF
PRESUMPTIONS (ARTICLE 24F)
9.1.
Relevant provisions
The relevant provision can be found in the VAT Implementing Regulation:
 Article 24f (subsection 3c)
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
9.2.
Background
As from 1 January 2015, the supply of telecommunications, broadcasting and electronic
services will, in all cases, be taxable at the place where the customer is established, has his
permanent address or usually resides.
To clarify the tax treatment of B2C supplies, rebuttable presumptions for the location of
the customer have been put in place.
9.3.
Why was there a need for clarification?
Specific presumptions are put in place with guidance on what is the place of taxation in
situations where the place where the customer belongs is practically impossible to
determine or cannot be determined with certainty. Each specific presumption can be
rebutted by the supplier on the basis of three items of non-contradictory evidence.
Where no specific presumption applies, it is presumed that the customer is established, has
his permanent address or usually resides at the place identified as such by the supplier on
the basis of two items of non-contradictory evidence.
In this context it was necessary to clarify what type of evidence could be used to identify
the place where the customer belongs or to rebut a presumption.
9.4.
What does the provision do?
For telecommunications, broadcasting or electronic services, Article 24f lists evidence
which in particular should be used by the supplier to identify the place where his customer
is established, has a permanent address or usually resides or which could be used by him
to determine where that customer actually belongs.
The provision is relevant where, according to point (d) of Article 24b, it is presumed that
the place where the customer belongs is that identified by the supplier as such on the basis
of two items of non-contradictory evidence. It could also be relevant where, on the basis
of three items of non-contradictory evidence, the supplier would want to rebut one of the
specific presumptions.
This list of evidence is illustrative: the words ‘in particular’ are included to ensure that
Member States and business are fully aware that it is an indicative, non-exhaustive list.
Businesses operate different business models and the evidence that they collect in relation
to their customers can differ.
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For that reason, the list also includes a reference to ‘other commercially relevant
information’. It allows for other items of information not specifically included in the list to
be used as evidence for the identification of the place where the customer belongs and
rebuttal of presumptions.
No one item of evidence suits all businesses nor would it necessarily be appropriate for the
same items to be used in all circumstances. There is therefore no priority given to one or
the other item of evidence included in the list. This should give sufficient flexibility for
businesses so that the changes they will be facing in the run up to 2015 would be more
limited.
9.5.
Detailed issues arising from the provision
9.5.1.
What is covered by ‘other commercially relevant information’?
The list of evidence in Article 24f includes a reference to other commercially relevant
information. This point takes into account the fact that businesses have very different
business models and makes it more flexible for them to apply these provisions in practice.
It cannot be excluded that there will be cases where the only items of evidence available
will be those referred to as ‘commercially relevant information’. That does not imply that
only one item of evidence in itself will be sufficient to determine the place where the
customer belongs. Rather commercially relevant information as a whole (two separate
items or more) may provide supporting evidence overall – when taken together – as to the
customer and where he belongs.
In such a situation the choice made by the supplier has to take into account the reliability
of the information available. The supplier should also be able to justify why this
information is relevant to him.
It would be impossible to mention all the different items that could be covered under
‘commercially relevant information’. As previously said, business models are very
different and one item which would be reliable for one of them could be highly unreliable
for another one.
Some of the items which, depending on the circumstances under which the concrete
business is conducted, could be used as ‘commercially relevant information’ are the
following:
(1) Unique payment mechanisms – When a customer uses one of the methods of payment
unique to a particular Member State, it provides accurate information identifying the
Member State in which the supply was made. It could be taken as an indication as to
where the customer belongs.
(2) Consumer trading history – When a customer has an established relationship with a
business, records from prior transactions could provide a reliable indicator for future
transactions. This information includes the historical IP address of the customer, billing
address, place of predominant consumption, etc.
(3) Gift card point of sale – When a gift card is sold to a customer who is physically
present at a retail establishment, it is likely that the customer will be local to the country in
which the establishment is located.
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(4) Country-locked gift cards – When gift cards are country-locked and can only be used
in the country of issue (this restriction is stated clearly on the face of the card), the
Member State in which the card is locked could be indicative of where the customer
belongs in much the same way that a café or hotel that sells wi-fi access in a public area is
treated as being the place of that customer.
(5) Documentation of third-party payment service providers – In many countries, payment
service providers verify at least part of the billing address of a payment method before
approving a transaction. Usually this information is not shared with the payment service
provider’s customer (i.e., sellers of electronic services) for data protection and security
reasons. However, when the payment service provider shares the information with the
supplier of the service acquired, that information could be used as ‘commercially relevant
information’.
(6) Customer self-certification – When the subscriber provides confirmation (e.g. within
the online ordering process) regarding his country, his bank details (especially information
where a bank account is) and credit card information, this could be taken to be
‘commercially relevant information’.
9.5.2.
What may or may not be considered as a ‘billing address’?
Article 24f refers to the billing address which could serve as evidence when identifying
the place where the customer actually belongs or rebutting the relevant presumption. Its
purpose is to help the supplier to pinpoint where the customer is established, has a
permanent address or usually resides.
For those reasons an electronic address to which an electronic invoice is sent, seen by
many as a billing address, cannot serve as an item of evidence in this respect. For
telecommunications, broadcasting or electronic services although the IP address cannot be
taken as a billing address, it is recognised as a valid item of evidence which can be used
by the supplier when identifying the customer.
In addition, a postal address (PO box) should not be seen as sufficient to indicate the place
where a non-taxable customer belongs. That reflects the approach taken as regards taxable
persons in Article 10(3).
9.5.3.
What is the relation between Article 24f (list of evidence) and Article 24d(1)
(rebuttal of a specific presumption by the supplier)?
The list of evidence in Article 24f is only of importance when a supplier would want to
rebut one of the specific presumptions determining the place where the customer belongs
included in Articles 24a and 24b(a)-(c)18. It is only in these circumstances then that the
evidence listed in Article 24f may be used to rebut the presumption.
9.5.4.
How much detail does the supplier need when verifying the evidence?
Article 23 states that when establishing the place where the customer belongs, the supplier
should base himself on factual information provided by the customer and that he should
verify it by normal commercial security measures such as those relating to identity or
payment checks.
18
The scope of the specific presumptions from Articles 24a and 24b(a)-(c) is described in more detail in
Chapter 7.
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It should be recognised that ‘normal commercial security checks’ in many instances will
not provide 100% accuracy in identifying the place where each individual customer
belongs.
In many cases, the customer will have a regular relationship with the supplier. In those
situations it seems reasonable that after the initial more in-depth verification of the
information regarding the customer made by the supplier (examination of address, credit
card, etc., in particular upon registering for an account with the business), the latter should
not be required to verify it once again for each separate transaction. For subsequent
purchases (especially for frequent ones), customers will need only to submit an order and
the supplier should then be able to use the previously supplied and verified location and
payment information.
Nevertheless a pro-active verification should take place on a regular basis (in line with
normal commercial practice) but it should not be required to do so for each purchase.
9.5.5.
When are two and when are three items of non-contradictory evidence needed?
Two items of evidence are needed in all the cases where none of the specific presumptions
for telecommunications, broadcasting and electronic services (included in Articles 24a and
24b(a)-(c)19) can be applied.
All other supplies comprised by Article 58 of the VAT Directive are covered by
Article 24b(d) which requires two items of non-contradictory evidence when identifying
the place where the customer belongs.
Three items of non-contradictory evidence are only necessary when the supplier would
want to rebut one of the specific presumptions from Articles 24a and 24b(a)-(c).
Therefore, when one of the presumptions in Articles 24a and 24b(a)-(c) can be applied, the
place where the customer belongs will be determined according to the relevant
presumption, unless the supplier would want to rebut it using three items of noncontradictory evidence.
In cases where no specific presumption could be applied, the place where the customer
belongs should be determined using two items of non-contradictory evidence.
In any case, it should be borne in mind that the items of evidence have to be different and
should not duplicate each other. For instance, when the customer gives a billing address
and later confirms that same address through self-certification, that can only be taken to
constitute a single item of evidence. The same is the case when the customer gives his
bank details which in turn refer to an unique payment mechanism or are confirmed by the
payment service provider, or when an IP address and the geolocation point to one and the
same location. In those cases the supplier can only be seen to have one item of evidence.
9.5.6.
What if the items of evidence are contradictory?
It might happen that some businesses collect four or more items of information resulting
in two (or more) separate sets of non-contradictory evidence, which point to different
places where the customer could belong. It should be underlined that it is the supplier who
19
The scope of the specific presumptions from Articles 24a and 24b(a)-(c) is described in more detail in
Chapter 7.
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decides which items of evidence to collect and further, if information gathered is
conflicting, which elements he considers as most commercially relevant for identifying
most accurately the place where the customer belongs.
In this respect, the criteria to determine the place where the customer belongs are included
in Article 24. Where the services in question are supplied to a non-taxable legal person
priority should be given to the place where the functions of its central administration are
carried out (point (a)). That is so unless there is evidence that the services are used at
another establishment of that non-taxable legal person.
If the supply is made to a natural person, the usual residence of that person should be
given priority (point (b)). The permanent address should be used only if there is evidence
that the services are used there.
The supplier will have to decide which are the items of evidence that are more reliable in
determining the place where the customer belongs for his concrete business. For instance,
when universal pricing policy is applied i.e. the same price will be charged regardless of
the country of the customer, consumers have no incentive to mask the place where they
belong for tax purposes. In that case, the billing address provided by the customer would
therefore be a quite a reliable indicator. Consumer trading history would also be useful in
cases where there are different sets of evidence due to purchases made while travelling
(holidays, business travels).
To sum up the purpose in the case of conflict is to give priority to the place that best
ensures taxation at the place of actual consumption of the services.
In cases where items of evidence are contradictory, verification by the supplier on a
regular basis is more needed.
9.5.7.
What if the supplier does not have two items of non-contradictory evidence in the
context of Article 24b(d)?
In the event that a supplier has difficulties to collect two items of non-contradictory
evidence to determine the place where the customer belongs, he should nevertheless
continue to seek further evidence such as relevant commercial information.
In cases of doubt priority should be given to the place that best ensures taxation at the
place of actual consumption of the services supplied.
9.5.8.
What are the indicators of misuse or abuse by a supplier mentioned in
Article 24d(2)?
It is not possible to list possible indicators of misuse or abuse by the supplier. Possibilities
are too wide.
As a rule, businesses should not be held liable for misuse or abuse by their customers.
However, situations where a supplier applies a presumption (solely) to the benefit of his
customer, or where the supplier applies a presumption based on wrong information by his
customer although he knew or should have known that the information was wrong cannot
as such be excluded from the application of Article 24d(2).
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A tax authority may also rebut a presumption in cases of indications of misuse or abuse,
such as where the supplier has taken steps to manipulate the presumption to arrange a
preferential treatment. This may include, but is not limited to, a lower rate of taxation.
9.5.9.
To what extent may the supplier rely on information provided by a third party (in
particular a payment service provider)?
In many circumstances, taxpayers rely entirely on verifications undertaken by third party
trading partners, such as payment service providers and other intermediaries. It is
necessary to stress that the correct determination of the place of supply remains with the
supplier. Therefore, the fact that verifications are made by third parties does not relieve the
supplier of his responsibility in cases of misuse or abuse
9.5.10. Application of data protection rules in the light of the VAT changes that will enter
into force in 2015
Recital 17 of Regulation 1042/2013 states that ‘for the purposes of this Regulation, it may
be appropriate for Member States to adopt legislative measures limiting certain rights and
obligations laid down by Directive 95/46/EC of the European Parliament and of the
Council20 in order to safeguard an important economic or financial interest of a Member
State or of the European Union, including monetary, budgetary and taxation matters,
where such measures are necessary and proportionate in view of the risk of tax fraud and
tax evasion in Member States, and in view of the need to ensure the correct collection of
VAT covered by this Regulation’.
The processing of data may therefore be ‘necessary for compliance with a legal obligation
to which the controller21 is subject’ (Article 7(c) Directive 95/46/EC) or it can be
‘necessary for the purposes of legitimate interests pursued by the controller or by the third
party or parties to whom the data are disclosed [...]’ (Article 7(f)) Directive 95/46/EC).
In other words, the relevant taxable persons would need to be able to process personal data
of their customers in order to prove to the tax authorities that they correctly applied the
VAT rules on place of supply.
In any case, where data protection rights are limited in order to allow certain processing
operations, the characteristics and especially the purpose of such processing should,
according to the European Data Protection Supervisor, be specified and explicitly
provided for in national law.
20
21
Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection
of individuals with regard to the processing of personal data and on the free movement of such data
(OJ L 281, 23.11.1995, p. 31).
In accordance with Article 2(d) of Directive 95/46/EC “‘controller’ shall mean the natural or legal
person, public authority, agency or any other body which alone or jointly with others determines the
purposes and means of the processing of personal data; where the purposes and means of processing are
determined by national or Community laws or regulations, the controller or the specific criteria for his
nomination may be designated by national or Community law;”.
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10.
SUPPLY AT HOTELS AND SIMILAR LOCATIONS (ARTICLE 31C)
10.1.
Relevant provision
The relevant provision can be found in the VAT Implementing Regulation:
 Article 31c
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
10.2.
Why was there a need for clarification?
For all telecommunications, broadcasting and electronic services, as from 1 January 2015,
the place of supply will be at the place where the customer belongs, irrespective of
whether services are being supplied to a taxable person (B2B) or to a non-taxable person
(B2C).
Where these services are supplied in the hotel sector, the status of a customer taken
together with the place where that customer belongs can be difficult to ascertain. For the
supplier of accommodation, there is a risk of liability which needs to be mitigated.
To alleviate burdens on the businesses concerned and to safeguard revenues, guidance was
necessary to clarify the place-of-supply related issues that arise when these services are
being provided together with the accommodation.
10.3.
What does the provision do?
A practical and pragmatic solution is found with Article 31c which clarifies that when
telecommunications, broadcasting or electronic services are supplied together with
accommodation in the hotel sector or in sectors with a similar function, the services are
regarded as being supplied at those locations.
That only applies where the services are provided by a supplier of accommodation acting
in his own name, together with the accommodation provided by that supplier. For
Article 31c to apply there must be a distinct supply of these services where the customer is
required to pay separately.
It covers supplies made together with accommodation provided in the hotel sector but also
where the accommodation is provided in sectors with a similar function, such as holiday
camps or sites developed for use as camping sites. Those are the sectors listed in
Article 47 of the VAT Directive.
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11.
SUPPLY OF TICKETS BY INTERMEDIARY (ARTICLE
11.1.
Relevant provision
33A)
The relevant provision can be found in the VAT Implementing Regulation:
 Article 33a
Whenever reference is made to an article of the VAT Implementing Regulation, the
reference to that particular legal act is omitted and only the article is mentioned.
11.2.
Background
The entry to cultural, artistic, sporting, scientific, educational, entertainment and similar
events is taxable at the place where the event actually takes place. For a concert, to take an
example, that would be the place the concert is performed.
The place of taxation will be the same for supplies made to another business (B2B) or to a
final consumer (B2C).
11.3.
Why was there a need for clarification?
Where the organiser of an event sells tickets to the event directly to the customer wanting
to attend the event, it is clear that any VAT to be paid on the tickets will be due at the
place where the event actually takes place.
The tickets sold by the organiser could be distributed through an intermediary. It may be
that the taxable person intermediating in the sale of tickets actually buys and sells the
tickets in his own name and on his own behalf. The intermediary can however also act in
the name and on behalf of the organiser or can be acting in his own name but on behalf of
the organiser.
More guidance was needed in order to ensure that the tax is not obscured by the way in
which tickets are distributed.
11.4.
What does the provision do?
Tickets granting access to a cultural, artistic, sporting, scientific, educational,
entertainment and similar event should in all circumstances be taxable at the place where
the event actually takes place as provided for under Articles 53 and 54 of the VAT
Directive. It should also be the case where the tickets are distributed through an
intermediary.
Where the intermediary acts in the name and on behalf of the organiser of the event, the
actual sale of the tickets is, in legal terms, made by the organiser.
If the intermediary intervenes in the sale of tickets, acting in his own name and on his own
behalf, he acts as a principal when selling the tickets.
The intermediary can however also intervene in the sale of tickets acting in his own name
but on behalf of an organiser of the event. In that case, Article 33a clarifies that the
intermediary selling the tickets is deemed to have received the service consisting in
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granting access to the event and supplied it himself. It is consistent with the legal fiction
provided for under Article 28 of the VAT Directive.
In all the three cases, it is evident that the sale of tickets will be taxable at the place where
the event actually takes place.
11.5.
Detailed issues arising from this provision
11.5.1. Where should tickets booked online be taxed?
Tickets granting access to a cultural, artistic, sporting, scientific, educational,
entertainment and similar event are taxable at the place where the event actually takes
place. No matter how the tickets are distributed, the tax treatment remains the same.
Where tickets are distributed by electronic means, this does not change the nature of the
service supplied. Also, tickets booked online are taxable at the place where the event
actually takes place. That is confirmed by Article 7(3)(t) which excludes such supplies
from being electronic services (see also point 2.4.3.2).
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12.
TRANSITIONAL MEASURES (ARTICLE 2 OF REGULATION 1042/2013)
12.1.
Relevant provision
 Article 2 of Regulation 1042/2013
12.2.
Background
As from 1 January 2015, the supply of telecommunications, broadcasting and electronic
services will, in all cases, be taxable at the place where the customer is established, has his
permanent address or usually resides.
That is already the case for business to final consumer (B2C) supplies but only where
services are supplied to or from the European Union (although for telecommunications
and broadcasting services, this is based on effective use and enjoyment).
Within the EU such supplies however remain taxable in the Member State where the
supplier is established until the end of 2014. From 2015, those supplies will also be
taxable at the location of the customer.
12.3.
Why was there a need for clarification?
The moment that VAT must be paid is decided by when the chargeable event occurs
(liability) and VAT becomes chargeable (collection).
The chargeable event is defined in Articles 63 and 64 of the VAT Directive. Under
Article 63, the chargeable event takes place when goods or services are supplied. In the
case of continous supplies Article 64 clarifies that the chargeable event occurs at the
expiry of the period for which a successive statement of account or successive payments
should be made. By that time, the supply will have been made.
If payment is made on account under Article 65 of the VAT Directive or if a Member
State has availed itself of the option in Article 66 of the VAT Directive, VAT can,
however, become chargeable prior to or soon after supply, that is to say, prior to or soon
after the chargeable event occurs.
Where telecommunications, broadcasting and electronic services are supplied close to
1 January 2015, the change in the place of supply could result in double taxation or nontaxation if the rules applied by Member States as to when VAT becomes chargeable differ.
To avoid situations of double and non-taxation and with a view to facilitate this shift in
taxation, transitional measures had to be adopted determining, in a common way, which
services supplied around that date would fall under the new rules and which would not.
12.4.
What does the provision do?
Article 2 of Regulation 1042/2013 makes it clear that the decisive moment for determining
the place of supply is when the chargeable event occurs (and liability is incurred). This
applies to normal and continous supplies.
Where the chargeable event occurs before 1 January 2015 the place of supply is where the
supplier is established and no tax shall become chargeable in the Member State of the
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customer in relation to the same chargeable event (point (c) of Article 2). That would
apply irrespective of when the payment is made or when the invoice is issued.
If the chargeable event occurs on or after 1 January 2015, the place where the customer
belongs is decisive when establishing where the tax is due (point (b) of Article 2). The
moment when the invoice has been issued has no relevance in that respect.
However, where a payment on account regarding the supply in question has been made
prior to 1 January 2015, VAT on that payment on account shall become chargeable in the
Member State where the supplier is established according to the rules laid down in
Article 65 of the VAT Directive (point (a) of Article 2). For any payment that remains and
is paid subsequently (on or after 1 January 2015), VAT will be due at the place where the
customer belongs.
12.5.
Detailed issues arising from this provision
12.5.1. Payments on account made before the supply takes place
Where a payment on account is made before 1 January 2015, the supplier shall charge
VAT on it according to Article 65 of the VAT Directive. As the rules in force are still the
ones for 2014, VAT on that payment shall become chargeable in the Member State where
the supplier is established.
If the service is only supplied on or after 1 January 2015, the rule in point (b) of Article 2
of Regulation 1042/2013 implies that the place of supply for that service would be the
place where the customer is established or resides.
It could be thought that, as the place of supply of the service is the Member State of the
customer, the supplier should then rectify the invoice, receipt or bill referring to the
payment made on account, refunding the VAT paid in the Member State of the supplier
and charging the VAT on the Member State of the customer.
That would however imply a huge burden for all parties involved: suppliers, customers
and tax administrations, and would run counter to the objective pursued by the transitional
measures.
For that reason, guidelines22 were agreed by the VAT Committee almost unanimously in
order to clarify the interpretation that should be conferred to the transitional measures in
Article 2 of Regulation 1042/2013, regarding payments made on account.
In those guidelines it was expressly clarified that, where payment on account is made prior
to 1 January 2015, the rule in Article 65 of the VAT Directive would apply in all cases, so
VAT would be charged in the Member State where the supplier is established, on receipt
of the payment and on the amount received.
When the supply is finally made on or after 1 January 2015, VAT shall become
chargeable in the Member State of the customer, but only on the amount not covered by
any previous payment made on account.
22
http://ec.europa.eu/taxation_customs/resources/documents/taxation/vat/key_documents/vat_committee/
guidelines-vat-committee-meetings_en.pdf
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Therefore, if the customer pays on account prior to 1 January 2015 the total amount of the
price of the service, VAT shall be charged in the Member State of the supplier and no
VAT shall be charged in the Member State of the customer.
Where prior to 1 January 2015 a customer pays on account, for instance, 40 per cent of the
total price of the service, VAT shall be charged in the Member State of the supplier (on
that 40 per cent). The remaining 60 per cent shall be charged with VAT in the Member
State of the customer at the moment the chargeable event takes place or when another
payment on account is made on or after 1 January 2015 but before the supply.
The guidelines also make it clear that this rule would only apply in cases where the
payment on account is made according to the normal commercial practice of the supplier,
that is to say when the supplier had been using that policy to those supplies in the past. If
the circumstances of the supply are such as to show that the payment on account was
made with the only intention of avoiding taxation in the Member State of the customer
(for instance, when the payment on account was not required by the contract or it
exceeded the amount stipulated in that contract), this Member State could claim VAT on
the transaction according to the rule provided for in point (b) of Article 2 of Regulation
1042/2013.
It should also be borne in mind that, as taxation is split between two Member States, the
supplier should be able to prove to the Member State of the customer that a payment on
account was actually made before 1 January 2015 and the VAT on that amount was paid
to the Member State of the supplier. Therefore, in the invoice, bill or receipt issued when
the supply takes place it would be appropriate to include a reference to the invoice, bill or
receipt issued when the payment on account was made, and the date when that payment
was made.
12.5.2. What impact does the issue of an invoice have on the place of supply?
The date on which the invoice is issued has no relevance regarding the place of supply of
the service.
VAT shall be chargeable in the Member State of the supplier or that of the customer
depending on the moment the chargeable event occurs or the payment is made. The issue
of an invoice does not alter that rule.
12.5.3. What level of proof is required in order to show that a chargeable event has
occurred or a payment has been made before 1 January 2015?
The means of proof used by taxable persons in regard to their usual transactions would be
those also to be used to prove that a chargeable event has occurred prior to or after
1 January 2015. No special means of proof are required in that respect.
12.5.4. List of examples
Prepaid supplies
Example 1: An advanced payment or a payment on account is made before 1 January
2015 and the supply is also carried out or completed before that date. VAT then becomes
chargeable before 1 January 2015 in the Member State of the supplier.
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Example 2: An advanced payment or a payment on account is made before 1 January
2015 but the supply is only carried out or completed in 2015 or later. In this case VAT
becomes chargeable on the amount of the payment made on account in the Member State
of the supplier, at the moment that payment is made. For the amount not covered by the
payment on account, VAT becomes chargeable on in the Member State of the customer at
the moment the chargeable event takes place.
Example 3: Both the advanced payment and the chargeable event take place after
31 December 2014. VAT then becomes chargeable in 2015 in the Member State of the
customer.
Example 4: An advanced payment of 20 per cent of the price is made before 1 January
2015. Another payment on account of 40 per cent is made after 31 December 2014. The
service is finally supplied after that second payment on account. VAT becomes chargeable
in 2014 in the Member State of the supplier on the first payment on account (20 per cent
of the price). VAT becomes chargeable in 2015 in the Member State of the customer on
the second payment on account (40 per cent of the price) and on the amount remaining
when the supply is completed (40 per cent of the price).
Continuous supplies
Example 5: A continuous supply where the expiry of a period for which a successive
statement of account or a successive payment should be made, takes place before
1 January 2015. In this case VAT on the statement or payment should be charged in the
Member State where the supplier is established.
Example 6: A continuous supply where the expiry of a period for which a successive
statement of account or a successive payment should be made, takes place on or after
1 January 2015, even though the supply began in 2014. In this case, there are three
scenarios possible:
(a) The payment is made at the expiry of the period. In this case, as the chargeable
event occurs on or after 1 January 2015 and there is nothing to trigger the
chargeability of VAT prior to that date, VAT will be due to the Member State of
the customer.
(b) The payment of the total amount of the supply is made in advance before 1 January
2015. In this case, VAT is charged in the Member State of the supplier, as the
payment triggers the chargeability of the tax.
(c) A payment on account (a forfeit) is made in advance before 1 January 2015. Once
the period expires, the customer pays the remaining price of the supply. In this
case, VAT is charged on the amount of the payment on account in the Member
State of the supplier, at the moment that payment is made. VAT on the amount not
covered by the payment on account becomes chargeable in the Member State of
the customer at the moment where the period expires.
Supplies for which an invoice is issued before a supply takes place
Example 7: An invoice (or a bill or receipt where no invoice is required) for a one year
online access (beginning in 2014 and finalising in 2015) to a newspaper is issued on
20 December 2014. The invoice is paid by the customer on 29 December 2014. In this
case, VAT becomes chargeable before 1 January 2015 due to the payment having been
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made prior to that date, so it will be charged in the Member State where the supplier is
established.
Example 8: An invoice (or a bill or receipt where no invoice is required) for a one year
online access (beginning in 2014 and finalising in 2015) to a newspaper is issued on
20 December 2014. The invoice is paid by the customer on 3 January 2015. In this case,
the chargeable event takes place after 1 January 2015. The payment is also made after that
date. VAT will need to be charged in the Member State of the customer irrespective of the
date on which the invoice was issued.
Supplies for which an invoice is issued after the supply takes place
Example 9: The service is completed before 1 January 2015, but an invoice is issued
and the payment is made only after that date. In this case the chargeable event has taken
place before 1 January 2015, so VAT will be due to the Member State of the supplier.
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13.
RELEVANT LEGAL PROVISIONS
13.1.
VAT Directive
Article 24(2)
….
2.
‘Telecommunications services’ shall mean services relating to the transmission,
emission or reception of signals, words, images and sounds or information of any nature
by wire, radio, optical or other electromagnetic systems, including the related transfer or
assignment of the right to use capacity for such transmission, emission or reception, with
the inclusion of the provision of access to global information networks.
Article 44
The place of supply of services to a taxable person acting as such shall be the place where
that person has established his business. However, if those services are provided to a fixed
establishment of the taxable person located in a place other than the place where he has
established his business, the place of supply of those services shall be the place where that
fixed establishment is located. In the absence of such place of establishment or fixed
establishment, the place of supply of services shall be the place where the taxable person
who receives such services has his permanent address or usually resides.
Article 45
The place of supply of services to a non-taxable person shall be the place where the
supplier has established his business. However, if those services are provided from a fixed
establishment of the supplier located in a place other than the place where he has
established his business, the place of supply of those services shall be the place where that
fixed establishment is located. In the absence of such place of establishment or fixed
establishment, the place of supply of services shall be the place where the supplier has his
permanent address or usually resides.
Article 58
The place of supply of the following services to a non-taxable person shall be the place
where that person is established, has his permanent address or usually resides:
(a)
telecommunications services;
(b)
radio and television broadcasting services;
(c)
electronically supplied services, in particular those referred to in Annex II.
Where the supplier of a service and the customer communicate via electronic mail, that
shall not of itself mean that the service supplied is an electronically supplied service.
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Article 59a
In order to prevent double taxation, non-taxation or distortion of competition, Member
States may, with regard to services the place of supply of which is governed by
Articles 44, 45, 56, 58 and 59:
(a)
consider the place of supply of any or all of those services, if situated within their
territory, as being situated outside the Community if the effective use and enjoyment
of the services takes place outside the Community;
(b)
consider the place of supply of any or all of those services, if situated outside the
Community, as being situated within their territory if the effective use and enjoyment
of the services takes place within their territory.
Annex II
(1)
Website supply, web-hosting, distance maintenance of programmes and equipment;
(2)
supply of software and updating thereof;
(3)
supply of images, text and information and making available of databases;
(4)
supply of music, films and games, including games of chance and gambling games,
and of political, cultural, artistic, sporting, scientific and entertainment broadcasts
and events;
(5)
supply of distance teaching.
13.2.
VAT Implementing Regulation
Article 6a
1.
Telecommunications services within the meaning of Article 24(2) of Directive
2006/112/EC shall cover, in particular, the following:
(a)
fixed and mobile telephone services for the transmission and switching of voice,
data and video, including telephone services with an imaging component
(videophone services);
(b)
telephone services provided through the Internet, including voice over Internet
Protocol (VoIP);
(c)
voice mail, call waiting, call forwarding, caller identification, three-way calling and
other call management services;
(d)
paging services;
(e)
audiotext services;
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(f)
facsimile, telegraph and telex;
(g)
access to the Internet, including the World Wide Web;
(h)
private network connections providing telecommunications links for the exclusive
use of the client.
2.
Telecommunications services within the meaning of Article 24(2) of Directive
2006/112/EC shall not cover the following:
(a)
electronically supplied services;
(b)
radio and television broadcasting (hereinafter ‘broadcasting’) services.
Article 6b
1.
Broadcasting services shall include services consisting of audio and audio-visual
content, such as radio or television programmes which are provided to the general public
via communications networks by and under the editorial responsibility of a media service
provider, for simultaneous listening or viewing, on the basis of a programme schedule.
2.
Paragraph 1 shall cover, in particular, the following:
(a)
radio or television programmes transmitted or retransmitted over a radio or
television network;
(b)
radio or television programmes distributed via the Internet or similar electronic
network (IP streaming) if they are broadcast simultaneously to their being
transmitted or retransmitted over a radio or television network.
3.
Paragraph 1 shall not cover the following:
(a)
telecommunications services;
(b)
electronically supplied services;
(c)
the provision of information about particular programmes on demand;
(d)
the transfer of broadcasting or transmission rights;
(e)
the leasing of technical equipment or facilities for use to receive a broadcast;
(f)
radio or television programmes distribute via the Internet or similar electronic
network (IP streaming), unless they are broadcast simultaneously over traditional
radio or television networks
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Article 7
1.
‘Electronically supplied services’ as referred to in Directive 2006/112/EC shall
include services which are delivered over the Internet or an electronic network and the
nature of which renders their supply essentially automated and involving minimal human
intervention, and impossible to ensure in the absence of information technology.
2.
Paragraph 1 shall cover, in particular, the following:
(a)
the supply of digitised products generally, including software and changes to or
upgrades of software;
(b)
services providing or supporting a business or personal presence on an electronic
network such as a website or a webpage;
(c)
services automatically generated from a computer via the Internet or an electronic
network, in response to specific data input by the recipient;
(d)
the transfer for consideration of the right to put goods or services up for sale on an
Internet site operating as an online market on which potential buyers make their
bids by an automated procedure and on which the parties are notified of a sale by
electronic mail automatically generated from a computer;
(e)
Internet Service Packages (ISP) of information in which the telecommunications
component forms an ancillary and subordinate part (i.e. packages going beyond
mere Internet access and including other elements such as content pages giving
access to news, weather or travel reports; playgrounds; website hosting; access to
online debates etc.);
(f)
the services listed in Annex I.
3.
Paragraph 1 shall not, in particular, cover the following:
(a)
broadcasting services;
(b)
telecommunications services;
(c)
goods, where the order and processing is done electronically;
(d)
CD-ROMs, floppy disks and similar tangible media;
(e)
printed matter, such as books, newsletters, newspapers or journals;
(f)
CDs and audio cassettes;
(g)
video cassettes and DVDs;
(h)
games on a CD-ROM;
(i)
services of professionals such as lawyers and financial consultants, who advise
clients by e-mail;
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(j)
teaching services, where the course content is delivered by a teacher over the
Internet or an electronic network (namely via a remote link);
(k)
offline physical repair services of computer equipment;
(l)
offline data warehousing services;
(m) advertising services, in particular as in newspapers, on posters and on television;
(n)
telephone helpdesk services;
(o)
teaching services purely involving correspondence courses, such as postal courses;
(p)
conventional auctioneers’ services reliant on direct human intervention, irrespective
of how bids are made;
(t)
tickets to cultural, artistic, sporting, scientific, educational, entertainment or similar
events booked online;
(u)
accommodation, car-hire, restaurant services, passenger transport or similar
services booked online.
Annex I
(1)
(2)
Point (1) of Annex II to Directive 2006/112/EC:
(a)
Website hosting and webpage hosting;
(b)
automated, online and distance maintenance of programmes;
(c)
remote systems administration;
(d)
online data warehousing where specific data is stored and retrieved
electronically;
(e)
online supply of on-demand disc space.
Point (2) of Annex II to Directive 2006/112/EC:
(a)
Accessing or downloading software (including procurement/accountancy
programmes and anti-virus software) plus updates;
(b)
software to block
Bannerblockers;
(c)
download drivers, such as software that interfaces computers with peripheral
equipment (such as printers);
(d)
online automated installation of filters on websites;
banner
adverts
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(e)
(3)
(4)
online automated installation of firewalls.
Point (3) of Annex II to Directive 2006/112/EC:
(a)
Accessing or downloading desktop themes;
(b)
accessing or downloading photographic or pictorial images or screensavers;
(c)
the digitised content of books and other electronic publications;
(d)
subscription to online newspapers and journals;
(e)
weblogs and website statistics;
(f)
online news, traffic information and weather reports;
(g)
online information generated automatically by software from specific data
input by the customer, such as legal and financial data, (in particular such
data as continually updated stock market data, in real time);
(h)
the provision of advertising space including banner ads on a website/web
page;
(i)
use of search engines and Internet directories.
Point (4) of Annex II to Directive 2006/112/EC:
(a)
Accessing or downloading of music on to computers and mobile phones;
(b)
accessing or downloading of jingles, excerpts, ringtones, or other sounds;
(c)
accessing or downloading of films;
(d)
downloading of games on to computers and mobile phones;
(e)
accessing automated online games which are dependent on the Internet, or
other similar electronic networks, where players are geographically remote
from one another.
(f)
receiving radio or television programmes distributed via a radio or television
network, the Internet or similar electronic network for listening to or viewing
programmes at the moment chosen by the user and at the user’s individual
request on the basis of a catalogue of programmes selected by the media
service provider such as TV or video on demand;
(g)
receiving radio or television programmes via the Internet or similar electronic
network (IP streaming) unless the programmes are broadcast simultaneously
over traditional radio and television networks.
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(5)
Point (5) of Annex II to Directive 2006/112/EC:
(a)
Automated distance teaching dependent on the Internet or similar electronic
network to function and the supply of which requires limited or no human
intervention, including virtual classrooms, except where the Internet or similar
electronic network is used as a tool simply for communication between the
teacher and student;
(b)
workbooks completed by pupils online and marked in an automated fashion
without human intervention.
Article 9a
1.
For the application of Article 28 of Directive 2006/112/EC, where electronically
supplied services are supplied through a telecommunications network, an interface or a
portal such as a marketplace for applications, a taxable person taking part in that supply
shall be presumed to be acting in his own name but on behalf of the provider of those
services unless that provider is explicitly indicated as the supplier by that taxable person
and that is reflected in the contractual arrangements between the parties.
In order to regard the provider of electronically supplied services as being explicitly
indicated as the supplier of those services by the taxable person, the following conditions
shall be met:
(a)
the invoice issued or made available by each taxable person taking part in the
supply of the electronically supplied services must identify such services and the
supplier thereof;
(b)
the bill or receipt issued or made available to the customer must identify the
electronically supplied services and the supplier thereof.
For the purposes of this paragraph, a taxable person who, with regard to a supply of
electronically supplied services, authorises the charge to the customer or the delivery of
the services, or sets the general terms and conditions of the supply, shall not be permitted
to explicitly indicate another person as the supplier of those services.
2.
Paragraph 1 shall also apply where telephone services provided through the
Internet, including voice over Internet Protocol (VoIP), are supplied through a
telecommunications network, an interface or a portal such as a marketplace for
applications and are supplied under the same conditions as set out in that paragraph.
3.
This Article shall not apply to a taxable person who only provides for processing of
payments in respect of electronically supplied services or of telephone services provided
through the Internet, including voice over Internet Protocol (VoIP), and who does not take
part in the supply of those electronically supplied services or telephone services.
Article 13a
The place where a non-taxable legal person is established, as referred to in the first
subparagraph of Article 56(2) and Articles 58 and 59 of Directive 2006/112/EC, shall be:
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(a)
the place where the functions of its central administration are carried out, or
(b)
the place of any other establishment characterised by a sufficient degree of
permanence and a suitable structure in terms of human and technical resources to
enable it to receive and use the services supplied to it for its own needs.
Article 18(2)
2.
Unless he has information to the contrary, the supplier may regard a customer
established within the Community as a non-taxable person when he can demonstrate that
the customer has not communicated his individual VAT identification number to him.
However, irrespective of information to the contrary, the supplier of telecommunications,
broadcasting or electronically supplied services may regard a customer established within
the Community as a non-taxable person as long as that customer has not communicated
his individual VAT identification number to him.
Article 24
Where services covered by the first subparagraph of Article 56(2) or Articles 58 and 59 of
Directive 2006/112/EC are supplied to a non-taxable person who is established in more
than one country or who has his permanent address in one country and his usual
residence in another, priority shall be given:
(a)
in the case of a non-taxable legal person, to the place referred to in point (a) of
Article 13a of this Regulation, unless there is evidence that the service is used at the
establishment referred to in point (b) of that article;
(b)
in the case of a natural person, to the place where he usually resides, unless there is
evidence that the service is used at his permanent address.
Subsection 3a
Presumptions for the location of the customer
Article 24a
1.
For the application of Articles 44, 58 and 59a of Directive 2006/112/EC, where a
supplier of telecommunications, broadcasting or electronically supplied services provides
those services at a location such as a telephone box, a telephone kiosk, a wi-fi hot spot, an
internet café, a restaurant or a hotel lobby where the physical presence of the recipient of
the service at that location is needed for the service to be provided to him by that supplier,
it shall be presumed that the customer is established, has his permanent address or
usually resides at the place of that location and that the service is effectively used and
enjoyed there.
2.
If the location referred to in paragraph 1 of this Article is on board a ship, aircraft
or train carrying out a passenger transport operation effected within the Community
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pursuant to Articles 37 and 57 of Directive 2006/112/EC, the country of the location shall
be the country of departure of the passenger transport operation.
Article 24b
For the application of Article 58 of Directive 2006/112/EC, where telecommunications,
broadcasting or electronically supplied services are supplied to a non-taxable person:
(a)
through his fixed land line, it shall be presumed that the customer is established, has
his permanent address or usually resides at the place of installation of the fixed land
line;
(b)
through mobile networks, it shall be presumed that the place where the customer is
established, has his permanent address or usually resides is the country identified by
the mobile country code of the SIM card used when receiving those services;
(c)
for which the use of a decoder or similar device or a viewing card is needed and a
fixed land line is not used, it shall be presumed that the customer is established, has
his permanent address or usually resides at the place where that decoder or similar
device is located, or if that place is not known, at the place to which the viewing
card is sent with a view to being used there;
(d)
under circumstances other than those referred to in Article 24a and in points (a), (b)
and (c) of this Article, it shall be presumed that the customer is established, has his
permanent address or usually resides at the place identified as such by the supplier
on the basis of two items of non-contradictory evidence as listed in Article 24f of this
Regulation.
Subsection 3b
Rebuttal of presumptions
Article 24d
1.
Where a supplier supplies a service listed in Article 58 of Directive 2006/112/EC, he
may rebut a presumption referred to in Article 24a or in point (a), (b) or (c) of Article 24b
of this Regulation on the basis of three items of non-contradictory evidence indicating that
the customer is established, has his permanent address or usually resides elsewhere.
2.
A tax authority may rebut presumptions that have been made under Article 24a, 24b
or 24c where there are indications of misuse or abuse by the supplier.
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Subsection 3c
Evidence for the identification of the location of the customer and rebuttal of
presumptions
Article 24f
For the purpose of applying the rules in Article 58 of Directive 2006/112/EC and fulfilling
the requirements of point (d) of Article 24b or Article 24d(1) of this Regulation, the
following shall, in particular, serve as evidence:
(a)
the billing address of the customer;
(b)
the Internet Protocol (IP) address of the device used by the customer or any method
of geolocation;
(c)
bank details such as the location of the bank account used for payment or the billing
address of the customer held by that bank;
(d)
the Mobile Country Code (MCC) of the International Mobile Subscriber Identity
(IMSI) stored on the Subscriber Identity Module (SIM) card used by the customer;
(e)
the location of the customer’s fixed land line through which the service is supplied
to him;
(f)
other commercially relevant information.
Article 31c
For the purpose of determining the place of supply of telecommunications, broadcasting
or electronically supplied services provided by a taxable person acting in his own name
together with accommodation in the hotel sector or in sectors with a similar function, such
as holiday camps or sites developed for use as camping sites, those services shall be
regarded as being supplied at those locations.
Article 33a
The supply of tickets granting access to a cultural, artistic, sporting, scientific,
educational, entertainment or similar event by an intermediary acting in his own name but
on behalf of the organiser or by a taxable person, other than the organiser, acting on his
own behalf, shall be covered by Article 53 and Article 54(1) of Directive 2006/112/EC.
13.3. Implementing Regulation (EU) No 1042/2013
Article 2
For telecommunications, radio and television broadcasting or electronically supplied
services supplied by a supplier established within the Community to a non-taxable person
who is established, has his permanent address or usually resides there, the following shall
apply:
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(a)
the place of supply in respect of each chargeable event that occurs before 1 January
2015 shall be the place where the supplier is established, as provided for in
Article 45 of Directive 2006/112/EC, regardless of when the supply, or continuous
supply, of those services is completed;
(b)
the place of supply in respect of each chargeable event that occurs on or after
1 January 2015 shall be the place where the customer is established, has his
permanent address or usually resides, regardless of when the supply, or continuous
supply, of those services commenced;
(c)
where the chargeable event occurred before 1 January 2015 in the Member State
where the supplier is established, no tax shall become chargeable in the Member
State of the customer on or after 1 January 2015 in relation to the same chargeable
event.
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